Market Monitor | stockbee

6/27/2007

Market Monitor

  • Slowly the worm is turning. First signs of leadership breakdown are all over the place.
  • Stocks up 25% or more in 65 days has pulled back by around 25%.
  • Rallies and attempts at bounce are failing.
  • So the multi month rally is under pressure.
  • Steel, oil and energy, industrial metals, silver, gold are some of the sectors leading the 4% plus down movers.
  • The coming earning season in light of these market conditions is likely to lead to sector rotation.
  • Summer doldrum and thin trading will further add to the market volatility.
  • It is slow selling and we are yet to see a 200 plus down day. Market has been resilient for many months and the longer term picture is still bullish. Earnings trend show no deterioration. There are no extremes in bullish sentiments.
  • Such conditions are not ideal for major long term bets. Best option is to wait for the market to tip its hand. Once aggressive selling period is over fresh long opportunities will present themselves.
  • A 200 plus move on long side is what I will be watching for.

Later: Season of opportunity is approaching.....

10 comments:

QUIKTDR said...

When I use Relative Strength 1-Yr (vs SP-500) I get numbers like 139.00, 105.00, 72.00.

Does this mean first candidate has outperformed SPX by 39%?

How would you filter for top 2% ?

Pradeep Bonde said...

Yes.
There are many ways to calculate relative strength. One way is to use
((C - AVGC135 ) / AVGC135)
and take the top 2%
Another way is to use IBD style Relative Strength
0.4 * (C * 100 / C65) + 0.2 * (C * 100 / C130) + 0.2 * (C * 100 / C195) + 0.2 * (C * 100 / C260)
and take top 2%

QUIKTDR said...

Pradeep,

When using second formula
QUIKTDR said...
When I use Relative Strength 1-Yr (vs SP-500) I get numbers like 139.00, 105.00, 72.00.

Does this mean first candidate has outperformed SPX by 39%?

How would you filter for top 2% ?

Jun 27, 2007 7:28:00 AM


Pradeep Bonde said...
Yes.
There are many ways to calculate relative strength. One way is to use
((C - AVGC135 ) / AVGC135)
and take the top 2%
Another way is to use IBD style Relative Strength
0.4 * (C * 100 / C65) + 0.2 * (C * 100 / C130) + 0.2 * (C * 100 / C195) + 0.2 * (C * 100 / C260)

I get numbers such as MMM 555.45,

HD 513.84, PG 501.00. Now there is no way that these numbers represent MMM 455% relative strength, meaning it has been 4-5 times the SPX return. AM I CONFUSED? Please advise!

QUIKTDR said...

I am sorry my two posts somehow got intertwined.

When using second formula IBD style Relative Strength
0.4 * (C * 100 / C65) + 0.2 * (C * 100 / C130) + 0.2 * (C * 100 / C195) + 0.2 * (C * 100 / C260)


I get numbers such as MMM 555.45,

HD 513.84, PG 501.00. Now there is

no way that these numbers

represent MMM 455% relative

strength, meaning it has been 4-5

times the SPX return.

AM I CONFUSED? Please advise!

Pradeep Bonde said...

Those values are weighted averages of price changes, you are using them for ranking only. The actual value you can understand by decoding formula. But that is not relevant. What you want is ranking of stocks using those values.

Pradeep Bonde said...

2 * (C / C65) + (C65 / C130) + (C130 / C195) + (C195 / C260)

You can use this simpler version of the IBD like relative strength ratings.

QUIKTDR said...

Pradeep,

I hate to belabor a point but...

I used scan:

2 * (C / C65) + (C65 / C130) + (C130 / C195) + (C195 / C260)

as a recommended filter and it returned values such as, HOKU 8.01 , FRPT 7.48, WCI 4.70, KOMG 4.50, BZH 4.47.

What do these numbers represent? How do I get the top 2%

Pradeep Bonde said...

After you run the scan above, go to easyscan. Select all stocks, next select this scan, select list Rank in condition type. Take top 2%, which means 98 plus.
That will give you top 2% stocks ranked by this criteria.

Pradeep Bonde said...

I am assuming you are using Telechart, otherwise just sort the list of all stocks by this criteria and select top 2%.
So if list has total 8000 stock , take the top 160 ranked stock by this criteria.

QUIKTDR said...

I see the light!

TY