Registered User
Joined: 4/18/2005
Posts: 4,090
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I jut down loaded Blocks and I'm playing with the market indicators. They problem I'm trying to solve is that I have a little trouble in y trading right when markets shift their trend to sidewayse.... and trouble in sidewayse markets. Baring staying out of them, over the next few weeks I want to test some ideas I had for trading sidewayse markets in back scanner. but first I want to try to give myself an indicator that will help me sooner recognize the shift to a sidewayse market. I had a couple of ideas.. and as this is all new to me My logic may have holes and my thought process fizzles out
Originally I envisioned an indicator that would work like a Mac D (which I dont use and need to practice reading) and oscilate around a center line when items in a list, in this case the underlying stocks of the nasdaq, are mostly moving sidewayse and move up or down when they are trending. Which one would be the best to start with.
Some Ideas I had were to use % stocks above their moving averages, with multiple moving averages, say two or three. Or something with the advance decline line or ratio, or a combination of both?
Perhaps the McLellan ocilator is the way to go? Anyone familiar with this one?
Where would you guys start?
Then I want to get into Back scanner and play with strategies to trade sidewayese markets, since markets are usually sidewayse.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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A flat market is considered a market without trend.
Whan a market moves up or down it is considered
in a trend.
ADX is the standard indicator of trend strength. Usually
values below 25 (with a setting of 14,14) indicates a
flat market.
Other ideas. A flat regression slope. Flat moving averages.
(as a market rises the upward/downward the slope of a
moving average will increase)
Thanks
diceman
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Registered User
Joined: 4/18/2005
Posts: 4,090
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Thanks diceman ... I was thinking about the moving averages thig... I considered several moving averages. There are some other market indicators that help measure breadth and strength... I think using multiple of them will help me get the feeling for what I'm looking for. I'd like to see this turn in to a discussion about these market indicators and reading them.
do you know anything (beyond blocks knowledge base)about reading the McLellen Oscilator.
Reg. ADX those Values make a difference for time frame? short term intermediate etc etc??
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Registered User
Joined: 1/28/2005
Posts: 6,049
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I do not use the McClellan. My impression was it was
used more for overbought/oversold conditions than
flat markets.
Are you looking for the whole market to be flat or individual
stocks?
(may want to track the ETF's: QQQQ, SPY, DIA for flatness)
The ADX values will be based on the bar length used. A
monthly "flat" reading will be longer-term than a weekly.
A weekly longer-term than a daily. (and so on)
You may be interested in this technique for "flat" scans:
Scan for stocks bouncing in a lateral channel
Thanks
diceman
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Registered User
Joined: 9/22/2005
Posts: 849
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I get a watchlist containing some possible candidates, put in a chart template with linear regression of suitable length (10, 30, 100 days), and sort the linear regression by percent slope.
Then select those which fall within a suitable range, eg. +/- 1 percent
ps: It works for fast moving trends, too.
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Registered User
Joined: 12/25/2004
Posts: 51
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Identifying trend or lack thereof is always virtuous, but to find a flat market for trading is perhaps not. Best perhaps to identify a flat market for selling time premium? Best to predict perhaps is end the malaise? A suggestion as to the way to profit in flat markets and what to look for in studies.
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Registered User
Joined: 4/18/2005
Posts: 4,090
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My thinking was to allow me to see that the trend has changed sooner. Since markets are sidewaysemore than up or down I thought about trying some ideas I had for trading flat market strategies in backscanner.
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Registered User
Joined: 3/21/2006
Posts: 4,308
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Scott, where did you learn that markets are trending sideways more often?
All you have to do is veiw a chart for any of the major indexes to see the correlation..
Markets trend up more than any other direction...
If you are looking for individual stocks that are trending sideways at a given time, then the ideas already proffered on this thread are the best ways to find them (ADX, Linear Regression Slop and Moving average cross over to find trend change)
Also the hyper link to the Tutorial that Diceman has listed in his post will help...
I don't know if these are what you are looking for but good luck to you...
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Registered User
Joined: 3/21/2006
Posts: 4,308
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I do not know if you are seeking what I think you might be looking for, but there is no indicator that will foretell a change in trend before it happens..
The best indicators can only tell you when it is actually happening (Moving average crossover, Volume serge, Stochastics)
Unless you have a good Crystal Ball of course..
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Registered User
Joined: 4/18/2005
Posts: 4,090
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Yes.. Apsll I see your point.. my thinking is that those sidewayse periods tend to be broken up throught the major up trend.
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Registered User
Joined: 4/18/2005
Posts: 4,090
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Yes.. the more I'm thinking about it the more I think what i'm actually looking for is something that will help me get a better idea of strength and breadth. I am not looking for a crystal ball. However in the past I have had issues with getting caught at the beginning of a trend change. There is a period where my entries dont seem to be as effective as they were the previous month. Some of this could be greed and bad habbits. But there are times when the index logs an up day however it is because of a few extrordinary gainers and the rest of the body of stocks were flat to slightly down. I also noticed that coming out of the last consolidation at the bottom of last Mays intermediate correction that allot of stocks were beginning to move up and out before it was showing in the indexes.
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Registered User
Joined: 3/21/2006
Posts: 4,308
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Scott: Again just friendly advice..
You are over thinking the stock market (IMO)..
I have a few approaches that work for me, two in particular work when the market is kind or not so kind..
The indexes are just a summary of price movment for all securities listed in that index, nothing more to it. Despite the index performance, there are going to be stocks that are doing well, and some not so well.
Approach  (Short term) Find the ones that are doing well (regardless of Index performance) find a good entry point (Intraday or not) and have fun, then exit at the appropriate time with a profit. You can find these stocks with telachart scans, or having a list of stocks that you think are ready to move, and when they do then purchase them...
Approach  Find a good momentum stock that you have researched both Technicaly and Fundimentaly and then find a good entry point and then leave it alone (until it crosses down through a major moving average, like the 250) let the stock tell you when to exit.
If you want to try to time the market with your long term holdings then just liquidate them when the markets are corecting and re-purchase when they turn back up..
You clearly know how to find a good chart pattern, (IMO) I think you just need to learn propper entry and exit skills..
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Registered User
Joined: 1/28/2005
Posts: 6,049
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Its funny. If you listen to the news every day you would think
the "DOW" was the strongest index. (because of the new
highs)
If you look at actual performance. (Since early 2003):
IWJ up 128.49%
IWN up 122.97%
QQQQ up 82.35%
SPY up 66.24%
DIA (the DOW) up 52.37%
Thanks
diceman
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Registered User
Joined: 4/18/2005
Posts: 4,090
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Yea I know that about the dow and the averages.. I did begin to think that I was over thinking things a bit. I realized that I could maybee create a scan based on an idea similar to HNC's multiple Ma convergence. Say three intermediateish Moving averages. When the mas are all close to each other in some capacity for a minimum period of time that I think would help me Get a sense of how many stocks are consolidating.
I also thougth about creating a scan defining consolidations of different lengths in terms of multiple moving averages being close to each other and then sorting by visual slope of a linear regression line aplied to the Ma's.
but then again perhaps just better analysis of the major indexes.
As far as finding good stocks in weaker market conditions I've been thinking about that as well. I need to think about What conditions create "good performance" in those situations.
Apsll, if you remember the technitrader momentum scan there are alwayse, every day, some amazing gainers.. usually they were suprises (at the top of the list) but allot of them are cheap stocks (-$5) that took off out of a long consolidation. I want to focus on finding more of those stocks... Either I don't come across them untill they have moved or I dont' recognize their potential and pass them up.
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Registered User
Joined: 4/3/2005
Posts: 91
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Scott, You might take a look at my ACLS thread and look at my chart. Notice the bottom of the top chart, where I use 2 multiple settings to produce multiple colored lines. The top on of these is a group of multiple EMA of rather short periods that I found best fit my trading style. The next one is multiple Stochastics in different colors. I got these from an old Technical Analysis magazine in the 90s and derived the settings from trial and error ( experimental). I tried to write out how I used these, but I am so use to them, it is hard to describe. The settings might not work for others, but it is a possibility. The magazine also showed illustrations ( as I remember) of other multiple indicators, such as MACD with different settings, but I don't remember if I tried that or not. Jim
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