Risk Model for Swing Traders (US)
Our risk model for SWING-TRADERS (US Stock Market) is still showing a high risk environment.
Swing-Traders should still be very careful and keep risk to a minimum. A very few indicators in our risk model suggest that we may have reached the bottom of the current market correction.
Best way to manage the current situation is to start off with a very few and small pilot positions. If those work and your own portfolio is getting traction, market exposure can be increased.
Some details:
1. Market-Indices (Distribution Days Avg)
The distribution day count according to IBD's model is still showing a market in correction. That means that the price/volume action of the major indices are characterized by institutional selling. Not a good environment for swing-trading.
2. New 52w Highs / Lows
This indicator is still way below 1 indicating that more stockas are making new 52w Lows versus Highs. In a good evironment, you will see this indicator reading higher than 1.
3. Stocks above/below 200d MA
Only 30% of stocks are trading above their own 200d MA. Readings >> 50% indicate a broad market breadth which we currently do not have.
4. Up / Down Volume
Still below 1 indicating that the current market environment is more characterized by heavy selling.
5. Advance-Decline Line
Still in a downward trend. in a good environemtn, this indicator is in an upward trend or at least trending sideways.
6. Volatility Index VIX
Improved versus last week. Now reading < 30% and still falling. Might be a good early indicator that we may have reached a market bottom.
7. Bulls vs Bears
This is a contrarian indicator. Market sentiment is now less bullish which is good.
8. Margin-Debt
Now reading at 17% and still falling. Also a good contrarian indicator suggesting that we may have reached the bottom of the current correction.
Swing-Traders should still be very careful and keep risk to a minimum. A very few indicators in our risk model suggest that we may have reached the bottom of the current market correction.
Best way to manage the current situation is to start off with a very few and small pilot positions. If those work and your own portfolio is getting traction, market exposure can be increased.
Some details:
1. Market-Indices (Distribution Days Avg)
The distribution day count according to IBD's model is still showing a market in correction. That means that the price/volume action of the major indices are characterized by institutional selling. Not a good environment for swing-trading.
2. New 52w Highs / Lows
This indicator is still way below 1 indicating that more stockas are making new 52w Lows versus Highs. In a good evironment, you will see this indicator reading higher than 1.
3. Stocks above/below 200d MA
Only 30% of stocks are trading above their own 200d MA. Readings >> 50% indicate a broad market breadth which we currently do not have.
4. Up / Down Volume
Still below 1 indicating that the current market environment is more characterized by heavy selling.
5. Advance-Decline Line
Still in a downward trend. in a good environemtn, this indicator is in an upward trend or at least trending sideways.
6. Volatility Index VIX
Improved versus last week. Now reading < 30% and still falling. Might be a good early indicator that we may have reached a market bottom.
7. Bulls vs Bears
This is a contrarian indicator. Market sentiment is now less bullish which is good.
8. Margin-Debt
Now reading at 17% and still falling. Also a good contrarian indicator suggesting that we may have reached the bottom of the current correction.
Combing the BEST of two WORLD's: Cathie Wood & Mark Minervini