The AMD Trade: Which Signals Worked?

I'm looking back at the AMD bull trade, which I closed Thursday, Nov. 12, for a 33.7% profit in five days. Sweet.

I entered the trade based on the tech analysis mix that I'm using these days: Persons Proprietary Signal (pps), which is a black box indicator developed by John Person, confirmed by a bounce of the money flow index (mfi) out of oversold territory.

Thursday, pre-market, AMD announced it had settled a legal dispute with Intel (INTC) for big bucks, and the share price gapped upward. Now, the pps and mfi are designed to track money into and out of shares. Clearly money was flowing into AMD for days prior to the settlement announcement. (I don't allege insider trading.)

My problem with the pps, no matter how good its signals are, is that it is a black box. I don't know how it is derived, and so I don't really know what a signal represents. Would any other set of indicators have given us a signal?

Money flow index: The mfi, used alone, is prone to head fakes. It gave a bull signal on Nov. 4 when it bounced off the oversold line. But then it turned downward on Nov. 6, the day before the pps signal, and turned bullish again on Nov. 10. Using the mfi alone, we would have captured the upward gap, although at the cost of an extra exit and re-entry.

Relative strength index (rsi): Think of the rsi as an mfi without volume. The rsi tends to turn more quickly than the mfi, so it's more head fakey. Used alone, the rsi gave a bull signal on Nov. 3, turned bearish on Nov. 10, then bullish again on Nov. 11, in time to enter the trade and capture upward gap.

Bollinger bands (bb) + mfi: This combination gave a bull signal on Nov. 4, when the price opened well above the lower band, a move confirmed by the mfi's bounce off the oversold line. These indicators would have kept us in the position through the gap upward.

20-day simple moving average (sma20) cross: Useless. The price reached the sma20 on Nov. 11 and traded on either side of the line. However, the bull signal -- a decisive cross of the sma20 -- happened with the upward gap on Nov. 12. By the time the signal came, the price had already moved.

Stochastic (sto) + moving average convergence / divergence (macd) + 30-day simple moving average (sma30): This is the classic Three Green Arrows method used by InvesTools, a large American investor education company now owned by TD Ameritrade. Under this method, for bullish signals, the sto gets a green arrow when it crosses the 25 line moving up, the macd gets a green arrow when it pierces the zero-line on an upward trajectory, and price crossing above the sma30 produces the third green arrow. Under this method, the sto and macd green arrows were in place by Nov. 9. The third green arrow, off of the sma30, came with the gap upward. A sto+macd system, without the sma30, would have given a valid signal. Two green arrows are golden.

So, the signals were there, not just in the black box world of pps, but in the open source indicators as well.