Info!! Is The Marketplace Getting Stronger Or Weaker?

Here's a useful mensurate of strength in addition to weakness of the US of America stock marketplace for the intraday trader (raw information from e-Signal).  Imagine that yous are tracking every stock traded on every central every infinitesimal in addition to computing how many stocks are making fresh novel highs for that trading solar daytime minus the divulge making fresh novel lows that day.  That tells yous how strength in addition to weakness are emerging, across stocks, through the trading day.  

Most of the time, the novel highs/lows mensurate volition rail cost well.  When nosotros accept a trending market, we'll run across an expansion of novel highs over novel lows in addition to the mensurate staying consistently positive or negative (depending on tendency direction).  Oscillating inwards a higher house in addition to below a neutral nada betoken is to a greater extent than mutual inwards make bound, rotational environments.

Note how, on Friday, nosotros tested the solar daytime session lows inwards ES (blue line) in addition to all the same the novel highs/lows mensurate (red line) held good inwards a higher house their forenoon lows.  This was an of import sign that selling was non gaining breadth.  We thus saw the novel highs/lows climb steadily higher amongst cost through the afternoon.  The positive in addition to expanding breadth was an of import say that yous wanted to survive on the long side of the market.  There was no emerging weakness to fade, intraday.

An interesting facet of this fourth dimension serial is that yous tin strength out rail the novel highs/lows during premarket hours to run across if breadth is strengthening or weakening amid stocks trading earlier the NY open.  This sets upwards valuable comparisons when the marketplace opens, every bit on Friday, in addition to breadth right away deteriorates from premarket levels.  This is a useful indication that early on forenoon participants who rely on liquidity inwards the opening minutes are distributing shares.  That information helpfully flipped me from long to curt inwards my early on forenoon trades.

At a broader level, this is an illustration of how traders tin strength out produce goodness from looking at novel in addition to unlike information.  There are many stagnating traders who expect at the same information inwards the same one-time ways.  Collecting novel information sets allows for exploration of patterns, but about of which tin strength out survive useful inwards innovating in addition to finding fresh sources of edge.

Further Reading:  Finding Your Trading Strike Zone

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