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 Post subject: Trading on Market Breadth
PostPosted: October 24th, 2011, 3:38 pm 
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Joined: October 24th, 2011, 3:11 pm
Posts: 3
Hello,

This is a good trading environment to go in now. Low risk...for me. Hopefully wont gap down after deepavali... (euro summit...)

Below is the STI chart, weekly. I use breadth data to help gauge the market condition. Correspondingly, the weekly oscillating indicators can also help you do a rough gauge. According to Elder's Triple Screen and Impulse system, the macdH ticks up, its blue or green...go ahead to enter long positions.

Image

You can see the market has a high chance of rallying higher when both the stochastic n macdH are swinging up from oversold regions. So when the STI is swinging up...most stocks will follow suit. This is especially true when the MA is ticking up. This also means low risk entry period for you.

This is not a buy low sell high, or chart pattern/candlestick style of trading...more like a market momentum type. Buy at the right price, at the right time. There is no profit target...just ride as long as the market allows.

Jesse Livermore mentioned there is a few times a year that is tradeable, ie, when the general market condition is good. A time to trade, a time to go fishing :)

Stop loss and position sizing can be based on your own preference. Based on chart pattern, the next support level, pivot points, the prev minor low, and for me, I prefer volatility based stops.

Position sizing for me is calculated this way. I have a maximun tolerated loss of lets say $500.00/counter. (I would strongly recommend to be between 0.5-1% of your total trading capital, and the total money at risk at any one time to be no more than 20% of trading capital. You will need to gain 25% to claw back a 20% loss...)

For the 1st trade, max loss per share = entry - stop = 3035.52 - 2982.10 = 53.42
Units to buy = 500/53.42 = 9.36units

Below is a simple backtest result based on a simple advance decline indicator and using STI index as a test counter.

Image

This is a replica of my post with singstocks.com


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 Post subject: Re: Trading on Market Breadth
PostPosted: October 28th, 2011, 3:19 pm 
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Joined: October 24th, 2011, 3:11 pm
Posts: 3
Hello!

Below are 3 charts. Top is the STI index, below 2 is a visual representation of 2 types of breadth data i use to gauge when is a good time to enter and exit market. I use the weekly chart oscillator indicators to verify, and then choose the most liquid and leading sectors, plus strong trending stocks vs the STI to go into.

I will not post the counters I have chosen as I am trading them and i dun wish to be seen like im giving tips. those in the email list...i will explain why rmg was a silly mistake...I will use the STI as a trading counter to illustrate.

This is from my previous post.
Image

You will see that this backtesting was based on the middle breadth indicator. Check out the entry dates with the moment the graph reading reaches positive, and the exits will be based on the moment it dips

Image

So now you can see why I am very positive now :)

Incidentally, the bottom one based on backtesting has more trades & whipsaws, but generates better returns as it rides the trend longer.

You can check with the weekly charts' oscillating indicators, you will see similar results too.

What Im trying to show is...there is a time to enter & exit the markets, and there is a time to stay cash. There is no need to trade all the time. I use this to see when is a low risk (low risk is not = to no risk!!!) period to enter the markets where there is positive market strength. You can see why I post go cash in early august...becos the breadth data has gone really negative.

best wishes to your trades :)

this is a duplicate of my post with singstocks


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 Post subject: Re: Trading on Market Breadth
PostPosted: November 4th, 2011, 1:47 pm 
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Joined: October 24th, 2011, 3:11 pm
Posts: 3
yes, market sentiment is still positive. even though mon & tue really tested my discipline n resolve. my opinion was to take a trailing stop exit...but the indicators are still positive...so phew! and a big "m****e finger" to the greek PM, mr egomaniac.

the sti is still on a weekly rally, breadth is still hot (haha!), daily chart shows a good buying opportunity (a dip, just passed, still not too late)

----------------------------------------
No, its not the bear market.....yet!

You can see the STI index making a higher high and higher low (the blue circles)....a basic requirement for a positive uptrend....and it is still intact. Unless it breaches and breaks below the white horizontal line.

I am still positive on the market. It's not my opinion, it;s from "reading the tape" of the breadth indicator. (see prev email screen shot).

So there is actually an opportunity to "buy on the dip" when prices dip further a bit and then start to rise. This has to coincide with a uptick to the stochastic and macdH indicators. The new stop out (stop loss) level will be this new (future) dip. I come to it it it comes. If not, and the market plunges, then I will let you know to go cash or not :)

Image

Remember this? M1 is still not triggered. RMG is already out.

Other than Singtel....all are at breakeven or still making money.... :)

Finger crossed for tonight's Ben's news announcement on the FOMC meeting outcome.

cheers!
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So now, wed's now can be considered the dip, and u can put your stop near this low (STI: ard 2750 level).

If you check out most counters, they will most likely show the same senario as the STI index now. Now this is not a recommendation to trade these counters and moreover, i have long positions in some of them...here are some counters that behaves "STI-Like" (dun just take my words...go on, open their charts and open sti, do a comparison)

CityDev
F&N
OCBC
OLAM
Singtel (losing the correlation soon)
Ezion
MapleLog
1stRes
& of course the ETF la

cheers & happy trading :)

this is a duplicate of my post in singstock


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