The Madison Scoring System

When our Madison Score is at zero, the market is in neutral, that is, we view it as neither a BUY nor a SELL. As the market moves, our numbers also move, and what becomes important is the direction of the numbers. As the numbers rise towards +20, we are aware that the advance is getting "long in the tooth" and will reach a climatic level from which it will begin to head lower. We refer to this as the sell zone.

Likewise, as the market begins to sell off our numbers will begin to drop off towards -20, sometimes quickly. So do you "load the boat" as soon as we hit +20 (sell zone) or -20 (buy zone)? Not necessarily.

Once these levels are hit, we know that our buy or sell zone will begin to take hold -- but the potential always exists to have a blow off to the downside, or a parabolic final up move. That is why use our proprietary Trend and Volume measures to confirm the buy or sell zone.

When we enter our zones, we will produce another signal that will alert you to our extreme buy or sell zones. These extremes are hit at +35 or -35. It is very important to pay careful attention to our commentary in the days following such a signal as we will attempt to time the entry or exit in a precise manner.

The extreme buy or sell zone is usually triggered by a geopolitical event or market event that causes a panic. Although these are particularly turbulent times for market participants, we can deal with this event with a level head, as our scoring system can handle these anomalies often referred to as the Black Swan event. You may only see such a signal once every year or two but they do appear. Be prepared with our work.