Trending Vs Non Trending Markets
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     shayneb
Member
Username: shayneb
Post Number: 3
Registered: 12-2007Rating: N/A
Votes: 0
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| | Sunday, February 10, 2008 - 04:11 pm: |  
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I only trade shares in the ASX 200.
Should I look at the ASX 200 and confirm if this index is trending or ranging before looking at individual stock ?
Assuming the ASX 200 was currently ranging rather than trending does it still make sense to be looking for individual shares within the ASX 200 that are trending and therefore more suited to trend indicators ?
Regards
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sway
Member
Username: sway
Post Number: 138
Registered: 12-2005
Rating: N/A
Votes: 0
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| | Monday, February 11, 2008 - 01:58 pm: |
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Shane
I note you use the word trading rather than investing. If that's really what you mean, then a ranging XJO should not be an impediment because you are looking to put volatility to work for you ie short term moves in and out in a few days or maybe a week.
But since you mention trends, I think your question really refers to longer term movements. If that's the case, in my opinion it does still make sense to look for stocks that are trending up, making new highs etc. Even in a bear market, there will be some good longs. Look at MCC for example.
If you have read Weinstein's book, his basic strategy is to look for action just breaking resistance, going above the rising 30week WMA with high volume. If this is happening while the underlying market (eg XJO or XAO) is going sideways or down, the Relative Strength will be heading upwards. You can plot this using IC's Ratio indicator (not RSI which is a completely different animal). Here's a brief summary of Weinstein's method http://wallstreetwindow.com/weinstein.htm?gclid=CLj2woiTs5ECFRizbwodbwwTgA
Cheers
Sway
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smallworld
Member
Username: smallworld
Post Number: 809
Registered: 01-2004
Rating: N/A
Votes: 0
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| | Monday, February 11, 2008 - 10:28 pm: |
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Shayneb
"Should I look at the ASX 200 and confirm if this index is trending or ranging before looking at individual stock ?"
There are trending stocks even in a ranging market e.g. CEY, MCC, MGX etc.
"Assuming the ASX 200 was currently ranging rather than trending does it still make sense to be looking for individual shares within the ASX 200 that are trending and therefore more suited to trend indicators ?"
I believe you can always look for trending stocks. However, If XJO is not trending, then you'll need different trading strategies. For example, you might like to have stricter entry criteria, and you exits will include a profit target exit rather than just riding the trend per se. You might also like to review your other stops. You might also like to limit your exposure either through position sizing or reduce the no of positions that you have simulataneously. Lastly but not the least, you can also consider having both long and short positions in your portfolio.
(Message edited by smallworld on February 11, 2008)
Rugby is just a game, it isnt a matter of life or death, it is more important than that
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captain_chaza
Member
Username: captain_chaza
Post Number: 3007
Registered: 02-2003Rating: N/A
Votes: 0
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| | Monday, February 11, 2008 - 10:54 pm: |
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Just as a reminder
It always handy to remember
A man will sail the Globe on an Easterly Course a lot differently than he would sail the Globe in the Westerly Direction
Salute and Gods' speed
"While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C.
"I believe the future is only the past again, entered through another gate."
Sir Arthur Wing Pinero 1893
"There are two times in a man's life when he should not speculate: When he can't afford it, and when he can." Mark Twain, 1897
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