Info!! U.S. Tick: Tracking The Stock Marketplace Past Times Tracking The Marketplace Of Stocks

Yesterday's trading session was interesting inward that nosotros started amongst early on weakness, experienced a selloff that failed to intermission final week's lows for most stocks, together with thus rallied dorsum to the opened upwards earlier breaking out together with moving steadily higher.  Yesterday's post illustrated how nosotros tin runway such shifts inward forcefulness past times identifying the break of stocks making fresh intraday highs vs. lows.  

If you lot click on the nautical chart above, you'll come across the ES futures plotted against five-minute average values of upticks vs. downticks for every unmarried U.S. stock.  This is like to the NYSE TICK measure that I accept written nearly inward the past, but amongst 1 of import difference:  it tracks all stocks, non just those listed on the New York Stock Exchange.  For that reason, this U.S. TICK mensurate is peculiarly skillful at capturing the forcefulness together with weakness of the wide marketplace 2nd past times moment.  (U.S. TICK readings obtained via e-Signal platform).

(A theme for just about other twenty-four hours is a comparing of readings for NYSE TICK together with U.S. TICK every bit a agency of gauging the relative buying/selling involvement inward smaller cap stocks.  During the recent menstruation of Russell 2000 weakness, the relative ratio of U.S. TICK to NYSE TICK was an splendid say together with helped amongst trading IWM.  It is very of import to continually nowadays inward trading together with discovery sources of information that confer an edge.  I backtest a lot of marketplace information together with accept never constitute criterion indicators--particularly the presets on trading apps--to last especially predictive.)

Notice how downticks dominated upticks early on inward the session, alerting us to early on weakness despite the fact that the marketplace was upwards from Friday's open.  We sold off difficult inward the morn together with then, from slowly morn forward, something interesting happened:  upticks on the twenty-four hours began to outnumber downticks.  We tin come across this visually past times looking at the expanse of the nautical chart that U.S. TICK spends to a higher house together with below the goose egg business or nosotros tin practise a cumulative business for the U.S. TICK.  Either way, what you'll come across is that the distribution of U.S. TICK values shifted during the day--in advance of the market's upward break.  Buyers began to dominate sellers.

Any private value for the U.S. TICK tin last high or depression depending on random flows of the moment.  When nosotros come across an ongoing shift inward the distribution of values over time, however, that tells us that the dynamics of the marketplace accept altered.

There is yet just about other agency to position shifts inward supply/demand inward the stock market:  When you lot report the distribution of U.S. TICK values over time, you lot know the levels that stand upwards for 2+ criterion deviations inward the positive together with negative direction.  These important TICK levels say you lot when at that spot is a meaningful surge inward the participation of buyers or sellers.  Note that nosotros saw just such a surge during the noon hour, 1 time again inward advance of the market's cost breakout.  Following the breakout, nosotros saw additional surge values to the upside, confirming that buyers were inward control.  Knowing this tin deal a trader avoid selling a steamroller market.

We tin follow the stock marketplace through indexes such every bit the ES futures, but measures such every bit U.S. TICK present us that it is too a marketplace of stocks.  By tracking inward existent fourth dimension what every stock is doing, nosotros hit a perspective on marketplace forcefulness together with weakness that is non possible but past times next a unmarried index of capitalization-weighted large caps.

Further Reading:  More on Indicators together with Trading Patterns Can Be Found Here
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Info!! Reading Render In Addition To Remove For Stocks During The Trading Day

Who is inwards command of the 24-hour interval session for stocks:  buyers or sellers?  Influenza A virus subtype H5N1 straightforward means to assess this is to rail the NYSE TICK ($TICK), which continually updates the publish of stocks trading on upticks versus downticks.  If nosotros run into wide buying, we'll run into rattling high (+800 or greater) TICK numbers.  Broad selling gives us readings of -800 or lower.  

Above nosotros tin flame run into the v infinitesimal TICK readings for yesterday's trading session.  Note that nosotros opened alongside pregnant buying involvement together with stayed higher upwards the neutral nix (yellow) draw for nearly of the trading session.  Most important, nosotros never saw selling readings of -800 or less.  Quite simply, many to a greater extent than stocks traded on upticks than downticks over time, non then much because upticks were extremely high equally because nosotros had a relative absence of selling pressure.  That absence of sellers was a nifty say that prices would remain draw of piece of occupation solid through the session.

By watching the distribution of TICK readings--and shifts inwards that distribution--through the trading day, nosotros tin flame perish sensitive to demand/supply changes that typically live on on at marketplace position turns.  When the distribution is one-sided, recognition of that fact tin flame proceed us out of bad trades.

Further Reading:  Tracking the Stock Market With a Broad TICK Measure
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Info!! Trading Notes For The Calendar Week Of April 25, 2016

Friday, Apr 29th

*  I'll hold upwards talking amongst the Benzinga pre-market prep show at 8:35 AM today.  We'll create got a seem at the psychology of the electrical current market.

*  I beloved this postal service regarding innovating too finding novel merchandise setups from Ivanhoff.

*  Stocks bounced nicely from overnight weakness yesterday but too then stalled at prior peak levels too sold off sharply into the close.  Breadth was non peculiarly poor; fresh monthly novel highs dropped to 915 too novel lows rose a fighting to 235.  Technology/NASDAQ shares broke below their before Apr lows; housing stocks (XHB) also took a hit.  That's non the form of activity you'd await if the marketplace position was pricing inwards economical strength.  Fewer than 50% of SPX shares are trading inwards a higher house their 3, 5, too 10-day moving averages.  Let's encounter if that tin send away convey inwards buyers, equally prior short-term corrections create got been able to do.

*  H5N1 few things dissimilar most this most recent marketplace position drop:  1) higher volatility on the decline, amongst extreme selling on the NYSE TICK measure; 2) the market's inability to rally during USD weakness too commodity firmness; too 3) continued breakdown of correlations amid marketplace position sectors.  It's when nosotros encounter shifts inwards volatility too correlation that nosotros desire to entertain notions of authorities change.

*  My intermediate-term measures are silent nowhere close oversold levels.  I'm quite opened upwards to toppy marketplace position activity hither too an intermediate-term correction inside the bull cycle.  I'm non expecting a precipitous reversal to send marketplace position mode.  Note the precipitous rising inwards VIX.  My Pure VIX model has turned neutral; non yet inwards "fearful" territory.

Thursday, Apr 28th

*  A seem at the recent displace to higher involvement rates, which has affected the trading of higher yielding stocks too stock sectors.

*  Stocks create got fallen dorsum afterward the Bank of Nippon disappointment final night.  We're right away close the lower terminate of the recent trading range.  I haven't noticed item breadth weakness.  Indeed, smaller cap indexes moved to novel highs yesterday, equally did a lay out of large cap sectors.  Much of the index weakness has come upwards from technology scientific discipline shares too the higher yielding sectors.  New monthly highs rose to 1112; novel lows rose a fighting to 209.  My intermediate-term wheel measures are stretched to the upside, however, so I would non hold upwards surprised to encounter farther consolidation.

*  Most of the corrective activity we've seen inwards stocks since the Feb depression has consisted of sector rotation; therefore no meaningful deterioration inwards the breadth numbers.  Below nosotros tin send away encounter a nautical chart of stocks across all the States exchanges making fresh 3-month highs versus 3-month lows.  It has stayed good for yous throughout the recent move.  One of the things I'm tracking going forrad is the grade to which nosotros encounter across the board weakness on pullbacks versus rotational movement. 

Wednesday, Apr 27th

*  Here's a valuable perspective on challenging hedge fund performance from the Mathematical Investor site.

*  My mensurate of breadth volatility has reached depression levels final reached inwards belatedly November, 2015 before the marketplace position drop.  Volume inwards stocks has also been lagging, which has been associated amongst subnormal forrad returns.  That beingness said, breadth improved yesterday, amongst 876 fresh monthly novel highs too 189 novel lows.

*  Note the divergent sector surgery inwards the past times week, amongst higher yielding shares underperforming too commodity-related shares outperforming.  (Graphic from FinViz).  Rates create got been rising ahead of the Fed; I'm keeping a unopen optic on this.  Note also how technology scientific discipline has been lagging.  Rising rates?  Higher commodities?  Low growth?  Can't imagine a stagflation scenario would hold upwards a non bad one...

Tuesday, Apr 26th

*  Excellent interrogation links from Abnormal Returns.  H5N1 non bad aggregation of quant interrogation comes from Quantocracy.  Lots of novel ideas inwards these sources too lots of practiced blogs to follow.

*  So far my trading experiment has been interesting.  I've been placing far fewer trades, solely trading when the marketplace position lines upwards on 3 fourth dimension frames too a short-term signal is triggered.  The signal comes from volatility bands drawn around lawsuit bars, so the bands reverberate what I've been calling pure volatility (volatility per unit of measurement of marketplace position volume).  The target is also based upon a motility inwards pure volatility units.  The really structured nature of the opportunity taking has led to zilch overtrading too a higher hitting charge per unit of measurement on trades.  I'm placing solely a 10th of the trades I was placing before, overall profitability inwards dollar price has non been hurt, too of course of educational activity risk-adjusted profitability has increased greatly.  It is non clear to me that much of the trading nosotros produce adds value.  By structuring rules around our best trades, nosotros tin send away create important gratis fourth dimension for interrogation too life exterior of markets.

*  We saw increased selling push clit per unit of measurement area inwards yesterday's trade, but cost held relatively good too has bounced a fighting inwards overnight trade.  New monthly highs dropped to 586 too monthly lows also dipped to 208.  I'm silent non seeing important weakness across sectors; the key banking company focus the balance of the calendar week volition dominate trade.  

*  We tin send away encounter the market's forcefulness inwards the wheel mensurate below.  My long-term wheel interrogation suggests that nosotros made an of import wheel depression inwards Feb (the prior wheel depression was October, 2014) too create got been inwards a momentum stage of the novel cycle.  I ultimately await the electrical current wheel to create got us to novel highs, driven equally much past times dovish key banks too the postulate for yield equally growth per se.

Monday, Apr 25th

*  There is a psychological procedure that underlies self-confidence--and to a greater extent than specifically a cognitive process.  Key is the recognition is that confidence is an seem of optimism--and optimism comes from finding structural similarities betwixt introduce challenges too past times ones that create got been mastered.  This is really relevant to the capacity to stick amongst one's ideas too atmospheric condition drawdowns.

*  I'm currently working on a projection that tracks long-term cycles inwards the stock market.  These cycles extend for months, non minutes or days.  It is at this horizon that momentum effects most clearly emerge.  For example, if nosotros larn dorsum to 2006 too rails the per centum of SPX shares that unopen inwards a higher house their 100-day moving averages, nosotros notice that the move past times one-half of readings (those inwards which in that location has been strongest breadth) final result inwards an average side past times side 50-day gain of +2.15%.  The bottom one-half of readings average a side past times side 50-day gain of solely +.33%.  The lion's part of the surgery differential occurs afterward a 20-day belongings period.  Think most what that agency for traders who prepare longer-term ideas but create got to merchandise them on curt fourth dimension frames too what that agency for short-term traders.  Also recollect most the implications for the electrical current market.

*  Stocks create got pulled dorsum inwards overnight trading, continuing to consolidate recent gains.  None of my breadth measures propose that we're yet at an oversold level, equally tin send away hold upwards seen below.  This mensurate tracks SPX shares trading inwards a higher house their 3, 5, 10, too 20-day moving averages.  (Raw information from Index Indicators).

Info!! Letting Markets Tell Their Stories

With booming momentum stocks showing signs of bust, hither is some valuable perspective from David Shvartsman as well as the Finance Trends site.  David's makes an of import point:  Nothing goes upward forever.  Stocks alongside a bully story only shaky fundamentals are peculiarly vulnerable to circular tripping.

Few problems tin endure therefore painful as becoming anchored to a story well-nigh a society or industry--or a macro theme--and as well as therefore failing to psyche to the stories that markets are themselves telling.  I vividly remember the attempts to traders to purchase dips all the means downward inwards the post-2000 tech meltdown.  I as remember the hurting of those who kept selling rallies inwards the post service 2008-2009 bull market.

One argue I similar to follow the cumulative NYSE TICK on an intraday solid position down is that it tells me when buyers vs. sellers are taking the upper paw as well as when they are balanced.  On a hateful solar daytime similar yesterday, when my model forecast was pointing upward, tracking the reversal of the TICK proved invaluable.  All forecasts, stories, as well as themes are hypotheses:  they are maps, only they are non the territory.  It's the stories told past times moving markets that are ultimately important, as they render the tests of our hypotheses. 

Markets frequently nation their ain stories alongside relative forcefulness patterns.  Is the marketplace rewarding increment as well as speculation, or is it rewarding security as well as yield?  Look at the recent relative surgical operation of XHB as well as QQQ versus XLU as well as XLP.  Clearly, increment is non what is beingness rewarded.  Similarly, at a global level, y'all tin rails EEM vs. SPY or, inwards fixed income, junk bonds (JNK) vs. investment-grade debt (LQD) or emerging marketplace debt (EMB) vs. US debt (AGG).

How practise stocks merchandise relative to bonds?  How does EM FX merchandise relative to DM?  Are macro markets reflecting global growth: global slowdown; or idiosyncratic, relative movement?

Bottom line:  past times spending as good much fourth dimension focusing on the stories nosotros nation ourselves, nosotros tin neglect to discern the stories of markets.  Permabears as well as permabulls are those who convey therefore fallen inwards honey alongside their narratives that they convey instruct deaf alongside abide by to the market's stories.

Markets are e'er communicating; therefore much of trading success begins alongside listening.

Further Reading:  Listening, Trading, as well as Emotional Intelligence

No tree grows to the heaven as well as no stock goes upward forever, especially those story stocks for which existent profits increment as well as audio fundamentals are lacking. - See to a greater extent than at: https://risetrader.blogspot.com//search?q=round-trip-stocks-momentum-booms-and#sthash.EVU7PW7S.dpuf

No tree grows to the heaven as well as no stock goes upward forever, especially those story stocks for which existent profits increment as well as audio fundamentals are lacking. - See to a greater extent than at: https://risetrader.blogspot.com//search?q=round-trip-stocks-momentum-booms-and#sthash.EVU7PW7S.dpuf

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Info!! Assessing The Recent Stock Marketplace Pose Strength

Stocks moved smartly to novel highs inward the major averages this by week.  Sector rotation was specially noteworthy, amongst old leaders utilities together with consumer staples--defensive together with yield plays--falling behind together with to a greater extent than growth-oriented sectors--consumer discretionary together with raw materials--showing detail strength.  This reflects pull inward U.S.A. of America economical information together with an increased pricing of odds that the Fed volition stimulate to normalize involvement rates afterward this year.

The top nautical chart tracks the divulge of stocks across all exchanges making fresh three-month novel highs vs. novel lows. (Raw information from the Barchart site).  Note that novel highs accept been growing inward recent sessions, simply stay below peak levels seen inward 2014.  This reflects the fact that many sectors, such equally financials, energy, consumer staples, together with healthcare, accept non registered recent novel highs.  Still, I banking concern complaint that relatively few shares are registering fresh novel lows, an indication that buying has been broad-based.  Indeed, the bottom nautical chart tracks the Cumulative NYSE TICK--the cumulative upticks vs. downticks for all NYSE stocks--and shows consistent buying involvement from institutional players.  (Raw information from e-Signal). 

The 2nd nautical chart from the top is my mensurate of intermediate term marketplace strength.  It is a 10-day moving average of SPX stocks making 5, 20, together with 100-day highs vs. lows.  (Raw information from Index Indicators).  It has risen sharply inward recent sessions together with is close a momentum peak.  Note that it is non at all odd for this pull mensurate to top out ahead of cost during intermediate-term marketplace cycles, which way that nosotros could come across farther upside drift fifty-fifty if breadth moderates from here.

The 2nd nautical chart from the bottom shows the divulge of NYSE stocks closing higher upward their upper Bollinger Bands vs. those closing below their lower Bands.  (Raw information from Stock Charts).  It is really mutual for this mensurate to peak ahead of cost during intermediate-term marketplace cycles together with that's what has happened then far.  Note, however, that the Bollinger Balance--the divulge of stocks closing higher upward vs. below their Bands--has remained consistently positive inward recent sessions, reflecting the buying pressure level noted above.

So where does that exit us?  Here are a few observations:

*  We made a momentum depression inward mid-January, amongst the lows inward really early on Feb drying up.  From that point, nosotros accept embarked on a novel intermediate-term upward cycle, which is approaching a momentum peak;

*  Buying pressure level has been pregnant during this close recent upward wheel together with should proceed to propel prices higher, fifty-fifty after nosotros accept made a momentum (breadth) peak for this cycle.  We quest to come across selling pressure level from institutions stimulate to transcend buying pressure level earlier the electrical flow wheel is imperiled;

*  Despite fresh cost highs, many sectors are non making novel highs thence far together with stocks making novel highs are below 2014 levels.  I believe the electrical flow upswing is business office of a wide topping formation inward stocks together with non a fresh bull marketplace leg; a pregnant expansion of novel highs beyond 2014 levels would contradict that view;

*  In my electrical flow base of operations instance scenario, nosotros proceed to drift higher on upward buying momentum, simply ultimately volition top out together with supply to the belatedly 2014 trading attain equally business office of the market's broader topping.

This is a full general roadmap; a wide hypothesis rather than a difficult together with fast conclusion.  As always, I volition survive tracking the marketplace mensurate together with updating that roadmap.

Further Reading:  Views of Market Breadth
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