How to use Market Breadth to trade profitably | stockbee


How to use Market Breadth to trade profitably

Daily# of Stocks Up >4% on high volume719
Daily# of stocks down >4% on high volume  79
Primary# of stocks up >25% in a quarter3202
Primary# of stocks down >25% in a quarter 231
Secondary#of stocks up >50% in a month118
Secondary#of stocks down >50% in a month3
Secondary#of stocks up >25% in a month511
Secondary#of stocks down >25% in a month25
Primary fast  MM 34/13 + 3065
Primary Fast  MM 34/13 - 421
Secondary#of stocks up 100% plus in a year1556
Secondary#of stocks up 200% plus in a year537

Market Monitor is a overall timing model for timing the stock market. Market Monitor tells you when a primary bullish or bearish move has high probability of starting or ending. Market Monitor also indicates likely correction zones in a primary  bull or bear move. So it gives you both long term and short term read on the direction of the market. At simplest level it tells you when to trade methods like Episodic Pivots, Double Trouble, Modified Double Trouble, IBD 100 and 200.
Market Breadth is the basic concept behind the Market Monitor. Market Breadth simply tells you how many stocks are going up, how many going down, and how many are unchanged. There are variations of the basic breadth idea like measuring number of new highs and new lows, or measuring the up volume and down volume. But ultimately all breadth indicators mathematically are derivatives of :
A D and U
A= number of advancing stocks
D= number of declining stocks
U= unchanged
Different people have massaged this data in various ways by using variety of mathematical techniques like moving average, exponential moving average, ration analysis, standard deviation and so on to develop number of breadth based indicators. The book The Complete Guide to Market Breadth Indicators will give you a comprehensive picture of all imaginable breadth indicators used in the market. No matter your time frame of trading (day trading, swing trading, or investing) breadth based indicators can be extremely useful. If you are short term trader (day trader or swing trader) it is even more useful.

Market Monitor uses the basic breadth concept but with a twist. continued...

1 comment:

The Sound Center said...

Thank you, Pradeep. I appreciate it.

Nas100 and COMPQ have flipped for now. We'll see.