Spotting a bottom
The relentless selling continues. The good news is markets are close to a decent intermediate term bottom. The easiest way to spot this is to look at the performance of the following indicators: NASDAQ Bullish percents ($BPCOMPQ), NASDAQ Summation Index ($NASI) and NASDAQ stocks over the 50-day MA ($NAA50). These indicators are excellent measures in isolating bottoms in the NASDAQ (and for the market as a whole). They tend to lag a little in tops; these indicators peaked at the start of February (2006) which was an ideal sell for the NASDAQ, NASDAQ 100 and SOX, but was too early for the Dow, S&P and Russell 2000 which peaked last week.
The table below provides the performance of my newsletter picks in the months after a bottom occurred in these indicators. The stocks are drawn from my "Breakout" and "Subscriber [$]" lists. The "% Win" represents the proportion of stocks for that month which closed profitable. The "% gain/trade" is the average return per trade for winners and losers combined.
For comparison, I have listed the current values of these indicators:
$BPCOMPQ: 51.05
$NASI: -309
$NAA50: 728
It is clear we are not yet at a bottom, but by June we could be looking at some nice summer setups for a run in to Fall. I look for a cross of a 5-day EMA once indicators have crossed above or below certain thresholds to signal intermediate term tops or bottoms. A reversal on a weekly chart is another method which works well for the NASDAQ Bullish percents ($BPCOMPQ) and NASDAQ Summation Index ($NASI).
Luckily, once a bottom is in place for these indicators, the conditions necessary to profit from it can last a couple of months. From my own research, Breakout stocks have performed strongest with respect to the other scans I use during this period and I expect this pattern to repeat (see table). All my Breakout stocks are Free.
Not available from before, but which have performed consistently well since its introduction, I will be investigating the performance on my Trade Ideas scan stock picks. I will be interested to see if this can continue to outperform my current stock scan selections.
fallond
The table below provides the performance of my newsletter picks in the months after a bottom occurred in these indicators. The stocks are drawn from my "Breakout" and "Subscriber [$]" lists. The "% Win" represents the proportion of stocks for that month which closed profitable. The "% gain/trade" is the average return per trade for winners and losers combined.
For comparison, I have listed the current values of these indicators:
$BPCOMPQ: 51.05
$NASI: -309
$NAA50: 728
It is clear we are not yet at a bottom, but by June we could be looking at some nice summer setups for a run in to Fall. I look for a cross of a 5-day EMA once indicators have crossed above or below certain thresholds to signal intermediate term tops or bottoms. A reversal on a weekly chart is another method which works well for the NASDAQ Bullish percents ($BPCOMPQ) and NASDAQ Summation Index ($NASI).
Luckily, once a bottom is in place for these indicators, the conditions necessary to profit from it can last a couple of months. From my own research, Breakout stocks have performed strongest with respect to the other scans I use during this period and I expect this pattern to repeat (see table). All my Breakout stocks are Free.
Not available from before, but which have performed consistently well since its introduction, I will be investigating the performance on my Trade Ideas scan stock picks. I will be interested to see if this can continue to outperform my current stock scan selections.
fallond
