Grob109 Registered: Aug 2003 Posts: 2754 04-23-04 08:38 PM ________________________________________ Quote from ig0r: So volume of all sector stocks combined and look for strong increase along with high rate of change as a whole? ________________________________________ Yes. The way to make money trading in this "kick off" is to be ready. You can do a weekly analysis of the sectors. Intermediate term movement is the focal fractal. If you look at school of trout in a pool of water you see how it works. The fish school. Among them there are fish who turn out to give the school a sense of action. In a small gathering within the school, some fish beging to move as a group. you see the velocity (I measure it using spread sheet that has motion indicators (FA) as criteria.) The fish are not changing size (think value (price)). They accelerate out of the school and parts of it follow. Thus the market is moving being lead by a group I call a sector. That is the NLP of it. To make money you set up a quote sheet to list each stock in the sector. Order it by "unusual volume" if you use qcharts. This puts "leaders" at the top. As you watch intraday you see the cummulative volume forthe day and you compare it to 65 day average using "unusual volume". When the volume easily passes the lowest daily volume values (DU for Dry Up), then you get to see price go green and the % net for the day goes up by 5% of more within an hour of passing through the DU volume. As the top of the list "peels out" the others begin to follow. there is a saying "Watch the leaders and trader the laggers". It is a simple anticipatory low risk strategy. You will see that the peel out takes up to three days. Not all will go the first day. You asked about that already because of your "market sense". The sector move will go on for an intermediate term period. but if you are really pushing "making money" and having a steep equity curve, you will be a "trader" instead. You trade the "peel out" on the highest volatility "lagger" stocks in the sector. For those that know I "crossover' trade based on money velocity, you can see here that this is a vital aspect of getting to making money on a "ridiculous" unbelievable money velocity level. if you keep sector "portfolios" on stocktables.com, you will notice that they get lots of attention form the programs behindstocktables.com. You will be exiting with profits as the talkinh heads and lists begin to note the sector. The herd will be arriving. So then you witness "waves of advances on the dialy charts. About 5 waves per 6 months. Look at HOV from NOV 2002 onward. The channel is up. You own for the right to left traverse. Since the retrace (Trend Fader tries to trade these)falls off instead of going up, you sideline and wait for the right side of the channel to be hit and the price to take off again and again and again. Splicing about four or five sectors into your money streams gives you a daily selection of BO stocks. Doubling capital takes about 2 1/2 quarters. HOV does better as you see. MR Market missed that one after I suggested it to him. lol.
Grob109 Registered: Aug 2003 Posts: 2754 04-23-04 08:08 PM ________________________________________ Quote from ElectricSavant: And you heard it live on Et... What will you folks do with this info?...take a gander at it. Michael B. ________________________________________ 4 out of 5 people do not agree nor give any regard to my views. You can count on this for anything I post. Hardly anyone will begin to consider how to use my posts along side theirs. The broadest reasons relate to the differences in what I practice and what others do. There is no connection nor any overlap. Sector evaluation is not a trading issue per se as we see here. Sector movement is an intermediate term consideration. Once in a while a person brings up a real winner in ET. emk662 (I use an off the floor high quality chair myself) did this in the context of trading. igOr nails the crucial trading consideration. At some point in the sequence the sector movement triggers price movement and it is a sustained move.... All of this precedes the talking heads and the "hot news". It precedes making the lists and the shifts in EPS and RS. for traders it is extremely important to be there ahead of the herd. Imagine the effort it takes to be clued in on this kind of stuff. Trend Fader said it all. It is "ridiculous". What he means is that it is totally impossible for him and 4 out of 5 people to grasp what MAKING MONEY really is. I USE sector analysis to "be prepared". And there is that moment when a sector "takes off". If you added to your stock a day journal, a background of sector analysis and caught sector moves using intraday volume moves that precipitate early am price moves, you would have many significant results: you would make your profits in a week (and more if you had an exit strategy)and you would not have any retracements showing on your PnL. You would not be able to do dumb dollar averaging because it would not come up. Sectors ripple out when they BO. Leaders and laggers, offset in direct proportion to their EPS and RS. You can see the current rippling by simply do the increasing volume ranking on stocktables.com (do a tight quality screen to limit the list to 100 to 200 stocks.) All this is "ridiculous" for ET people it turns out. BUT it makes millionaires out of people who do the work. I, today, fail to understand why anyone who is a highschool grad or better, cannot equal or exceeed his salary within three years no matter how small the capital is that he starts with. Here we also get to see the consequences of persons "blowing out" their minds as a consequence of repeated failure. Look at the Waggie/ Trend Fader non-dialogue to see one person pointing out the totally wiped out behavior of another. Check my next post to igOr. I will point out how to watch a sector "peel out" on price following the volume breakout of an accelerating sector.
Grob109 Registered: Aug 2003 Posts: 2754 04-23-04 06:05 PM This is very important stuff. An Excel sheet is an easy way to accomplish this stuff. Prior to the invention of spread sheets it took a little doing. It operates in a modus about equal to IT trending of equities. One of the very fortunate things is that there are always opportunities. Fortunately, the relationships of the key variables to use for analysis are such that they all are leading of price moves of equities in any perticular sector. Personally I use about 200 separate sectors and I monitor their first derivatives to see how fast they are coming on and how fast they are exiting. Usually in most data bases you can also sort the constituents of each of the sectors to also determine the best money making ones to use. Just for humor and contrast, MR market tries for the last 15% of a move using his inane selection process. Most of his selections are often "spent" and actually are candidates that fall into sectors that have peaked and are commencing their retreat. He chose a housing construction equity this way recently. A longtime before that I suggested HOV to him as an alternative to another of his mispicks as it was proceding to be part of that sector move. I saw it as it came off base of 10 or so going to the top. What you are addressing is the beginning of 400% moves like HOV's. Any sector moves relative to others before it's components begin they cyclical price moves in that sector. I use three levels of duration to do analysis: short term, intermediate term, and longer term. the rate of change (first derivative) in each of the term durations, strikingly points out what is coming up. Long ago (late 50's), sector analysis was not popular to any extent. Data was sparse as well. I felt it was important, though. My compromise then was to focus on sectors that were, in turn, driven by sectors closer to ultimate consumers. I figured that they were like a ice skater at the end of a whip. It turned out to be correct. You will see this phenomena at play today as some sectors accelerate (second derivative) past the sectors they supply. With the invention of bytes as an alternative investment to molecules, all of this is even more amplified. The advent of "bubbles" is another example of sector emphasis. Getting this down is one of the most rewarding things going. If you look around you will see that very wizards got this down. While I remained an amateur all my life. I was paid a portal to portal courtesy by a NYC based institutional investment advisory firm in the early 60's, to commute from Greenwich to attend luncheons mostly related to institutional white paper sector analysis. Asked but never did it, I was also asked to tour Europe quarterly, on this subject as a presenter for big money II. Sector analysis would be a terrific replacement for what the financial industry thinks is "research" and market analysis today. Once you get it all down, you will find it scares the $hit out of others who are really skilled in near term stuff.
bubba7 Registered: Feb 2003 Posts: 787 08-05-03 01:46 AM ________________________________________ Quote from dvshucks: Hey, I'm pretty new and am trying out a few strategies. Could someone tell me anything about trading Sector Leaders/Laggards. How do you know when to buy a laggard? ****After leader BO's, start a pro rata volume tab on the laggard. The laggard will come off the recent low volumes it maintain by a factor of 3 to 4 in the first two hours after the open. When that happens you have about an hour to enter the laggard before price begins to move. Use a 30 min fractal. If the laggard falls off hard, should you instantly short the leader? ****Try to focus a little. The leader falls off before the laggard. I may be possible that you do not have a clear definition of leader and laggard. All sectors have them. What kind of industry is this successful with? *****All. by doing sector analysis you8 can get fairly far a head of the herd. IBD has the best setor classsification set and they renk quite well and they keep a great score card you can use on an excel spread sheet. Any ideas are appreciated, thanks. ** Do some reading in How to Make Money in Stocks. Underline too. do not try to use this stuff until you are fairly profitable.
Grob109 Registered: Aug 2003 Posts: 2754 04-25-04 07:40 PM I read the posts here. And it is clear that there is an excellent understanding that the power of considering market sectors is pervasive and provides a superb context for making money. I want to respond to the adroit way in which, logically, people have determined that we are looking at a big picture and properly. The global picture does really drive the sectors of the US trading markets. Invest the time in skimming business week to see the pictures taken in China. Regard the economic numbers along a few columns. People all over the world are intelligent and leading their lives to forward their interests. We are now connected electronically and everyone is empowered to perform on a level playing field. The US has stepped aside from the enduring process of iterative refinement (by the numbers and rational reasoning processes) to practice operating from an idealistic black and white viewpoint. As an aged person, I am experiencing living in the most "expensive" decision making period I have ever witnessed. We (the US) will pay the piper for this beyond my time horizon. In contrast, there is certainly an alternative taking effect around the globe that has a silver lining. The world is actually very capable of taking care of itself and bettering this situation and doing it rapidly. Global inovation based upon the corporate model will prevail. And that is where market sectors play out. At all times various market sectors will step into the limelight to factor the short term opportunities directly into accelerated capital appreciation. The world has never seen before the rapidity with which wealth will be created. Contributors here recognize and describe this. I especially emphasize the sectors that supply other sectors that are close to the ultimate consumer. There are parts of the world that will be acting as resources for other parts that are going to grow in quality of life beyond belief. The US had the opportunity to lead the world's process of "incorporating". The energizing of the globe as a needs delivery system is going to be based on the corporate financial model and financial equities markets throughout the world will take the measure of the wealth building and built. A swedish based furiture company allowed Bill Gates to be passed in wealth by creating a delivery system for furniture. We as traders need to intercept this opportunity. It is my belief that "creaming the markets" is the way to exceed anything as yet seen it terms of making money and acquiring great wealth for individuals. I devote one screen to a display of a map. It is a map of squares(rectilinear shapes) bunched by sectors that are bounded with frames. All squares are colored by a red to green spectrum that shows their daily losses (red), neutral (grey) or gains (green). This is rough and crude and interesting. Background stuff. I run quote sheets where leading indicators of price are shown for stocks that exhibit high money velocities. Hot lists. Cross over trading with amounts of money that can not be used in leveraged places where the markets just can't handle the capital. Even with hot lists, money has to be "flowed". Flowed at rates dictated by trading block size and cummulative daily volume. It is like an individual's printing machine for printing money. The amount of capital available to take out of the market has no real limit and an individual can never affect the market to any extent presently. In the years ahead all of this will be changing by orders of magnitude. In this thread it has been pointed out that all of this can be easily systematized for the persent and for the foreseeable future. It is correct to use a ZOOM in approach. I also tenure performers. For sectors, focus on conventional sets. To cut to the chase (KISS) for now, use several (three) sets of rankings for the sectors. Short term, middle term and longer term. We need to see the rankings change (This is velocity because you have a fixed periodicity of sampling) and to know their rate of change This is acceleration by the same reasoning). You get from this, the operation of the fundamental precept of snthesizing harmonics. (See aluminum and housing construction presently as already pointed out.) Use the leader/ lagger risk minimization strategy. Use the compound interest formula (See the set of Q's that I recommend everyone work through; this is Q 1). Get it very straight that doing more cycles is much more important than profit per cycle. Cut off the ends of cycles to do this. Learn to enter late and leave early in a cycle. Only hold through maximum money velocities. Acceleration from zero is not important compared to the maximum trajectories that occur when price is going through the axis of the cycle. When a stock begins to decelerate the exit is predicated on a switch that occurs as another stock accelerated into the maximum money velocity band. Get it straight that you cannot optimize making money from an intuitive point of view. You are not smart enough at this point to deal with exponential functions which is the nature of all natural phenomena. Markets are natural living entities. The huge bottom line in markets is that the big players are screwed. Individuals are the ones that make money. as time passes and you have a lot of capital, you will experience constraints for moving that capital. There is no difficulty in pulling capital out of an equity and applying it to another and nettiing low seven digits on that one effort in a single money stream of many in the overall accounts. What is required is to always have a selection of opportunities. The primary function you have to assume, in time, is making cash available for opportunities that you have. Obviously and uniquivicably, the opportunities lay in making continuous and excellent use of sector analysis and universe selection/maintenance (add/delete function). I surround the scope and bounds of equities investing with being aware of what is going on in the world. I have nine pairs of mismatched processes (slow(column 1) compared to faster(column 2)). I look at the consequences (column 3) of these pairs not working. I also examine what might be done to solve the consequential problems (column 4). These 36 considerations often point out sector hot spots and opportunities. One pair is legal processes (slow) vs inovation (fast); Money and size controls ("making markets"* consequence); use alternatives to legal processes (solution). *We will play here.
Those above without corresponding links to the original ET posts have been purged by ET during the recent system overhaul, or so it seems. I backed them up earlier - enjoy.
Thanks for the posts - nice work! Only had a couple of those. A lot was lost in the ET purge, they restored some but still lost many threads. Regards - EZ
Thanks for your considered response; I appreciate it. We do not do "tuning". We prefer to use binary vectors which assure certainty in the brief period in the future just before the Present and at the other side, the Present.