Info!! A Dissimilar Manner Of Touchstone Forcefulness As Well As Weakness Inward The Stock Market

One of my industrial plant inwards progress is tracking the release of NYSE stocks each twenty-four hours that give purchase signals as well as sell signals across unlike technical indicators.  Above are charts for NYSE stocks giving purchase vs. sell signals for Bollinger Bands (top chart) as well as the Commodity Channel Index (bottom chart).  (Raw information from the Stock Charts site).  As a rule, nosotros encounter the release of purchase signals peak ahead of cost during a marketplace wheel as well as the release of sell signals anticipate a wheel cost low.  Sell signals for the electrical flow wheel peaked inwards mid-January, amongst fewer sell signals posted at the belatedly January/early Feb lows.  Buy signals for the electrical flow wheel peaked early on inwards February.

One interesting facet of the Bollinger mensurate is that it is the absence of weakness--and non but the presence of strength--that alerts us to a rigid stock market.  When the marketplace is gear upwards to plow over, at that topographic point are typically weak shares as well as sectors leading the agency as well as that shows upwards every bit a relatively elevated release of sell signals for the Bollinger Band measure, fifty-fifty every bit the index cost has been nigh highs.  On the other hand, when real few stocks as well as sectors are weak, the marketplace oft drifts higher, every bit selling pressure level is minimal.

For example, I looked at the menses from early on May, 2014 (when I outset began assembling these data) to the acquaint as well as broke downwardly the release of sell signals for the Bollinger Band mensurate inwards a unproblematic median split.  When nosotros had few sell signals, the side past times side v days inwards SPY rose past times an average of +.37%.  When nosotros had to a greater extent than sell signals, the side past times side v days inwards SPY rose past times an average of solely +.06%. 

Interestingly, daily sell signals for the Bollinger Band mensurate correlate solely +.07 amongst the RSI mensurate as well as solely +.21 amongst the MACD measure.  The absence of sell signals for those latter 2 indicators has non led to superior returns going forward.  Indeed, when we've had few MACD sell signals, the side past times side v days inwards SPY convey averaged a attain of solely +.09% vs. +.34% when we've had many sell signals.  

It appears that separating the release of purchase as well as sell signals as well as looking inside each indicator captures unlike fourth dimension frames as well as unlike patterns of momentum as well as reversal.  This strikes me every bit a nigh promising surface area of research, peculiarly when nosotros focus on technical indicators that are non highly correlated.

Further Reading:  Technical Indicators From the Bottom Up
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