Tuesday, 1 January 2019

Disclaimer

All opinions expressed on this blog are the individual’s personal perspective and cannot be interpreted as a Buy/Sell indication!

It is strictly for informative purposes only!

Monday, 31 December 2018

MARKET AND/OR SHARE DIRECTION / MARK EN/OF AANDELE RIGTING




GROUP DISCUSSION:

HOW CAN I ANTICIPATE IN WHICH DIRECTION THE MARKET AND/OR MY SHARE/S MAY GO?

AFTER ANALYZING THE CHARTS, WHAT IS MY CONCLUSION?

WHAT HAS THE FEELING IN MY GUT, GOT TO DO WITH ANY OF THIS?

ATTEND OUR WEBINAR DISCUSSIONS, MONDAY/WEDNESDAY EVENING AND EVERY ALTERNATE SATURDAY MORNING.

CHOOSE YOUR TIME AND PLACE, REGISTER AND ATTEND – FREE OF CHARGE!
GROEP BESPREKING:

HOE KAN EK ANTISIPEER IN WATTER RIGTING DIE MARK EN/OF MY AANDEEL/E KAN GAAN?

WAT IS MY GEVOLGTREKKING NADAT EK DIE KAARTE GE-ANNALISEER HET?

WAT HET DIE GEVOEL IN MY MAAG, MET DIT ALLES TE DOEN?

WOON ONS WEBINAAR GESPREKKE BY, ELKE MAANDAG/WOENSDAG AAND EN ELKE TWEEDE SATERDAG OGGEND.

KIES U TYD EN PLEK, REGISTREER EN WOON DIT BY – GRATIS EN VERNIET!



Hendrik de Jager.







Saturday, 6 October 2018

Advancing vs. Declining stocks

What can we learn from the numbers of advancing vs. declining stocks?

Since 1900 up to today stats on the Dow:
  • The median up day is +0.51%
  • The median down day is -0.50%
  • But the Dow is up 39,500% over this time.
Looking at these figures, one would say: "how's it possible, reaching 39,500% with these small daily increments?  Well it's like eating an elephant, bite by bite.

With only two numbers at the end of the day, for example 8 advancing and 32 declining stocks from the JSE Top 40 index, J200. We can mathematical play around and get to interesting conclusions.  With the difference off -24 on the Spread or 0.25% Ratio, you can probably say this does not make any sense. Presenting the data graphical sketch a different picture.
Advance/Decline Line
The advance/decline is measuring market breadth, which answers the question, "how broad is the rally?"  The AD-Line can be used alone or together with the price chart to look for divergences. A divergence suggests that a move in the price chart is unsupported by the broad market, and it should, therefore, be taken as a warning of an impending turning point in the index or market.  A traditional technical indicator, such as a moving average or a stochastic oscillator, can be applied to the chart or used to smooth the signals it gives.
 
A/D Line = (# of Advancing Stocks - # of Declining Stocks) + Yesterday\'s A/D Line Value
Using the AD-Line graph next to the J200 and applying the RSI oscillator, looks as follows:

At the left-top, the AD-Line graph has formed a bullish flag. Though the price line has broken the flag and the support line for a 65% retracement.

The RSI indicator at the left-bottom displays oversold for a while and suggests time to turnaround.
Comparing the AD-Line with the J200 index.  At the right-top graph, we noticed that the index has broken the support trend line, as it completed the bearish flag.  This graph looks very bearish, but relief might be on the horizon. At least for the short term.

The RSI on the index also displays oversold conditions and confirmed the down fall.

Advance/Decline Spread
A variation on the A/D line is the A/D spread. Just as its name implies, the A/D spread charts the difference between the number of advancing stocks and declining stocks in a given market on a given day.

Advance/Decline Ratio
Another variation on the A/D spread is the advance/decline ratio, which divides the advancers by the decliners.

These two graphs are oscillators of the Advancing and Declining stocks within the J200 index.  The AD Spread is defined by subtraction and the AD Ratio by division.

Both of these oscillators have turned from the oversold level.

Absolute Breadth Index
The absolute breadth index is a measure of internal volatility. It calculates the absolute value of the difference between the number of advancing and declining stocks.


 
The chart is a representation of the volatility in the spread between advancers and decliners.  Above the horizontal line, stocks are trending and below the level, range bound. Currently we noticed that the bearish trend has been confirmed by this indicator, crossing the horizontal line.

Breadth Thrust
Breadth thrust is an internal indicator. It is a ratio of moving averages that creates an excellent judge of market momentum.


Breadth thrust can be read just like a stochastic or RSI, where overbought and oversold levels are at the extremes. Divergence with the underlying price chart points to weakening momentum.

Arms Index (TRIN)
Developed by Richard Arms, TRIN is a double-ratio that divides the A/D ratio by the A/D volume ratio.  I've adapted the formula by multiplying volume and price. This is to calculate a weighted TRIN.

 
Both the TRIN graphs have turned bearish, but need confirmation.
 
A value of less than 0.51 means advancing stocks are getting more than their share of volume, which is bullish for the market. When the value of TRIN is more than 0.51, declining shares are taking an outsized amount of volume, which is bearish for the market.

Note that the TRIN was smoothed with a 10 day moving average and a 3 standard deviation is used to set the pivot. The graph was reversed. Above the line is bullish and below bearish.
 

Playing around with the data and information, all add up to a picture and feeling for the market.

Trade with caution as the markets are very unstable and uncertain.
@Duplo123 or join us on Skype
 

Friday, 15 June 2018

ALSI, J200 and the TOPI

The All Share Index (ALSI), is the overall market barometer and found in the J203 index. The J200 is a JSE index derived from Top 40 shares and the TOPI is the trading instrument based on the top 40 shares, with a little tweak.
 
When trading the Top40 instruments CFD's or Single Stock Futures, you need to zoom in on behavior.  Below we have created two graphs based on the daily high and low price movement on the J200 index.  This can be used as a volatility indicator or just to find the average to set expectancy when trading the instruments.  It also highlights the change over time.
 
 
 
More information about the constituencies can be obtained at the JSE on their website at: https://www.jse.co.za/services/market-data/indices/ftse-jse-africa-index-series
 
Another method might be helpful to draft a correlation graph on the differences between the price chart and the moving average. From this we can find or determine when to change direction or not to get involve on the wrong side of the market. From the data below (up to 14 June 2018) we can clearly seen not to get involved on the long site, but rather change direction from long to short.
 
 
Taking the Big 5 from the index, the market movers, we can clearly notice the impact they could have. About 50% of the movement.  The top 10 or 12, 75%.  These stocks needs a close eyeball.
 
 
 
When adding the top 5 stocks together and creating a referential index, the following graph represents the below result.  Though this picture is very bullish, it did not implies no short term retracements. Rather what to expect in the days / week to come.  The correlation graph is more reliant to short term trading where we can use the below info as the underlining direction.
 
 
When comparing the Top5 to the J200 we notice the same picture differently.  The Head-and-Shoulder have not played out on the J200, where it was anticipated on the Top5 chart.  But taking the correlation picture into account, we realises that it might not happens tomorrow (15 June 2018).
 

 
Playing around with the data and information, all add up to a picture and feeling for the market.

Trade with caution as the markets are very unstable and uncertain.
@Duplo123 or join us on Skype

Thursday, 14 June 2018

Trade like a Pro

Trading is the name of the game and the game is to Buy or Sell. The players are the Bulls and Bears. The playing field is between two lines and played from one to the other side.  Between Support and Resistance, the goal lines.  When playing with the Bulls and Bears on their playing field, you need to correctly identify the lines.  To score, you need to act at these lines, the goal line.  The actions are to Buy at Support and Sell at Resistance.  The battles between Bulls and Bears take place at these zones.  It’s bloody, fearless and only the Smart money, the pros and those who know the rules of the game, that are winning.  Rules like Money Management, when to sit back on your hands, when to Buy or Sell and when to take a Loss or a Profit.
 
To compete with the pro's, you need to think and prepare like them. Anybody is welcome on the trade playing field, but keep in mind who the opposition is. Think of it as you are running onto the rugby field and your opposition is the All Blacks. You might just get hurt.  Yes, on the trading field it's not fiscal, but you might just lose your money or self-confidence.  You’re thinking, not me. I'm not one of the statistics.  I'm born great?  I'm a great trader from Day One?

Tiger Woods was not born great. He has a daily practice routine:
  • 6 AM: gym for 90 minutes
  • 7:30 AM: breakfast
  • 9–11 AM: hit balls on practice range
  • 11–11:30 AM: putting
  • 11:30 AM–12:30 PM: play 9 holes
  • 12:30-1 PM: lunch
  • 1–3 PM: hit balls on practice range
  • 3–4 PM: work on short game
  • 4–5 PM: play 9 holes
  • 5–5:30 PM: hit balls on practice range
  • 5:30–6 PM: putting
Not convinced yet that you are not going to be a great trader on Day One? What if you did the following before a trading session to gain experience? 

  • Plan and execute your trade as the first experience.
  • Made detailed notes in your trading journal — that’s two experiences.
  • Discussed this setup with others — now three experiences.
  • Replayed the trade in your head — and four.
  • Made and watched your video recording of this trade — now five.
  • Met in a training room and talk with a group about this trade — and six.
  • Visualized making this trade — and seven.
  • Practiced this trade on a dedicated simulator — and 8 and 9 and 10.
With just this one trade, you can turn one trading experience into 10 plus. Developing a daily learning schedule, can help transforming one trading day of experience into 10. Pickup on your experience 10x faster. Become a pro to play with the pro's. Practise and prepare like a pro, trade like a pro.