So you want to short the market - you figure I'll just swap around a couple of Marlyn's tools and we'll have it made. Let's see how far that gets you.
Let's start with something simple - RSI(2) > 98 and RSI(2) > 98 + ATR(10) > 10 MA
I guess the RSI + ATR filter might get the job done - with care - the problem is the numbers of selections are slim. Only 52 selections - and the 30 day net change was positive.
That's the problem with shorting - it isn't as easy as it looks. For every winner who bleats his win from the rooftops of the Ville - there are a hundred or more losers that you will never hear about. And options truly aren't the solution to this problem - they only look like they are.
Then I tried using a gap down approach similar to yesterday's gap up approach and the back test (short model) obtained a 52% win percentage, 1.22 Reward to Risk and 41.20 ROI which is the best yet. But there could be problems - here are the results of two days of using the gap down approach -
The biggest problem is we just don't get enough solid days up with solid down stocks to be able to put together a contrarian approach to yesterday's gap up model.
So if you are going to try your hand at shorting it has to be obvious that you need your own special tool set (as I have contended) and it is very difficult to do in a market where the bias is perennially up. Good luck.