Current market outlook
After the Monday buying pressure the market had a sedate day yesterday. The positive economic news did not have much of an impact. Some of the things I monitor are hinting at sector rotation:
1 Mcclellan Summation Index at 2215. Levels like these indicate rally lasting 8-12 months according to Mcclellan research.
2 65 Day up down ratio 1360/205. Throughout this move the ratio has remained at these level and the 200 number has remained more or less constant, not going low significantly, indicating sector rotation. Usually such action broadens and lengthens the rally as against sudden spikes below 200.
3 Month 10 points plus movers 74. This has also remained at below extreme momentum levels of 120 plus for entire duration of the rally.
4 The Month 50% plus indicator at 21. Readings of 25 plus indicate extreme momentum.
5 Stocks up 100% plus at 324 and stocks up 200% plus at 76. At extreme the figures are 800 plus and 200 plus.
Besides this couple of my other indicators indicate a churn at these levels. What it means is overheated stocks are consolidating or breaking down while new set of stocks are replacing them. That is why the values have remained steady. This can be a good sign, indicating more broadening of rally or it can be bad thing indicating that the rally had only steam to reach up to these levels and will lose momentum and this is distribution phase.
In addition to this I have other information to form my opinion and judgement, which some of you know about as . Most of that has to do with earnings data and earnings trend. Many of these things may not make sense to many. It combines many thing to look at possible scenario and as of now I do not see a rapid deterioration in those indicator. But things can change rapidly in the market and I am flexible plus most of the time the sum total of things I monitor give me pretty fast hints of trouble. Many times they are false alarms, but most of the speculation game is about profitable survival. If you avoid dangers without damaging your steak you can make lots of money in the long run.
At certain stages in rallies of longer duration, buying the momentum extremes is not the best strategy. In November I made lot of money in some of the top momentum stocks capturing 5-20 points in matter of few days on some of them. Now I am looking more at the new crop breaking out or likely to breakout based on earnings/sales and price momentum.
The market direction indicator system is just one part of the puzzle, the key to my trading is a stock selection strategy based on some tradable market anomalies.
1 Mcclellan Summation Index at 2215. Levels like these indicate rally lasting 8-12 months according to Mcclellan research.
2 65 Day up down ratio 1360/205. Throughout this move the ratio has remained at these level and the 200 number has remained more or less constant, not going low significantly, indicating sector rotation. Usually such action broadens and lengthens the rally as against sudden spikes below 200.
3 Month 10 points plus movers 74. This has also remained at below extreme momentum levels of 120 plus for entire duration of the rally.
4 The Month 50% plus indicator at 21. Readings of 25 plus indicate extreme momentum.
5 Stocks up 100% plus at 324 and stocks up 200% plus at 76. At extreme the figures are 800 plus and 200 plus.
Besides this couple of my other indicators indicate a churn at these levels. What it means is overheated stocks are consolidating or breaking down while new set of stocks are replacing them. That is why the values have remained steady. This can be a good sign, indicating more broadening of rally or it can be bad thing indicating that the rally had only steam to reach up to these levels and will lose momentum and this is distribution phase.
In addition to this I have other information to form my opinion and judgement, which some of you know about as . Most of that has to do with earnings data and earnings trend. Many of these things may not make sense to many. It combines many thing to look at possible scenario and as of now I do not see a rapid deterioration in those indicator. But things can change rapidly in the market and I am flexible plus most of the time the sum total of things I monitor give me pretty fast hints of trouble. Many times they are false alarms, but most of the speculation game is about profitable survival. If you avoid dangers without damaging your steak you can make lots of money in the long run.
At certain stages in rallies of longer duration, buying the momentum extremes is not the best strategy. In November I made lot of money in some of the top momentum stocks capturing 5-20 points in matter of few days on some of them. Now I am looking more at the new crop breaking out or likely to breakout based on earnings/sales and price momentum.
The market direction indicator system is just one part of the puzzle, the key to my trading is a stock selection strategy based on some tradable market anomalies.
Posts
7 comments:
You reffered me to Stockciphering.com a couple of weeks ago and I love it. It's very easy to read and navigate, minimal advertising on the pages (top only), comments regarding stocks nearing a breakout level or current breakouts are helpful also. This is a good tool for someone who doesn't have much time to devote to stock picking. My question to you is, Do you use this service as one of your tools now?
Yes. Plus some other databases and own data.
do you collect and aggregate all this data yourself or is it a "free" resource somewhere?
Some is free some paid. The basic idea is earning/sales momentum, but you have to go much beyond that to get in to some of these plays before the grandma in Timbuktu figures it out and gets excited. That way risk is lower.
Basicaly for stocks under active analysis coverage, the earning game works differently as much of the surprise is predicted well in advance, so just following declared earning does not help.
Read this Billion Dollar Secret link, it essentialy sumarises what needs to be done on those stocks.
http://www.zackselite.com/pdf/report.php?type=BDS
Or study this institutional pruduct site:
http://www.starmine.com/index.phtml?page_set=sm_products&sub_page_set=sm_professional
You don't have to subscribe to these , but if you study what they are doing and implement some of the learnings, you may have very very profitable next year.
After understanding it, one has to use low cost resources to duplicate some of the thinking for select stocks. Individual speculators sometime have better advantage than larger one in such games due to our flexibility and size.
See this also
http://investor.starmine.com/
thanks
by the way, i never mentioned that i live in NJ too!
NJ rules
Post a Comment