18
Jun
New Indicator - AD Moving Average Cross
Open, high, low, close and volume. If you are a technical trader, that’s it. Every indicator you use is based on five numbers. This is like using Sear’s Craftsman general purpose “basic” tool kit to build a race car . It can, perhaps, be done, Might take a while though. And then there’s the Craftsman Professional Mechanic’s Tool Set. Using the right tool for the job changes everything.
Composite / breadth data is just that. A new array of tools for trading indexes and exchange traded funds (ETFs). MasterDATA’s composite / breadth datafiles contain traditional breadth data as well as several new statistics compiled from the constituents of the various indexes and ETFs on it compilation list.
This letter will be the first of many discussing the application of this composite / breadth data in real world trading indicators To begin with, I am not too crazy about most of the “traditional” old-time market breadth indicators. I find many of them too subjective, too subject to interpretation. So, I leave them for others to explore with our data. Instead, here, we will look for new approaches that can be back tested and nailed down before we actually consider using them to trade or invest.
The first type of composite / breadth data to be discussed is advancing / declining issues. If an index or ETF (both of which I will refer to as composites) has 100 component issues and 2 of those issues close unchanged for the day that means that the remaining 98 issues either advanced or declined. If 60 issues closed higher (advancing issues), then the remaining 38 must have closed lower (declining issues). Obviously, this is not exactly rocket science. To me, however, that is one of its greatest strengths, simplicity.
The remainder of this post has been moved to a page in the Exploration and Filters section (left column). Click here to continue to the rest of this post….
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