Take Market Timing to the Extreme

I been experimenting with Williams %R (3) and how it relates to market timing and I've found out that waiting for extreme levels with this indicator often improves the timing of trades. I got this idea from reading some of Larry Connors work. Take a look at the following chart...

I used to just wait until Williams %R to get into oversold territory to look for long setups. But, now, I am more inclined to wait for an extreme reading of -5 or less for long setups (bottom blue line). If I want to trade more often, then I may look for short setups on an overbought extreme reading of -95 or higher (top blue line).

You can also use these extreme readings on individual stocks. If you have a StockCharts.com account, then you will just add a parameter to the TAZ scan that looks like this: [daily williams %r(3) < -95] for long setups and [daily williams %r(3) > -5] for short setups.