Breadth kicks ass, and punches shorts in the scrotum. Oh yeah, and price rose, too.
Summary:
Blah blah blah. The graphs show it all. Breadth matched price as both expanded to new highs. Volume was still below the 50 day average, but did rise compared to the previous few days.
The raw advancers and decliners indicator issued a sell signal for the existing open long trade (issued on 4/7 for the opening of 4/8). This position was closed at the close. Below is the spreadsheet tracking all the trades issued from the Daily Breadth Report. The report figures 100/shares per trade with no commissions included
While I hinted last night that I may establish a small short position this morning, in reality, I woke up late to work and didn’t add any shorts (or longs, oh, the horror!). Thank goodness for that.
How To Read the Breadth Report
Universe Screen: Applies to top three indicators. Does not apply to 52 week new highs and lows.
- The universe contains any stock trading on average more than 100,000 shares per day with a liquidity of at least $1,000,000 per day, over the last 50 days.
1. Top most indicator is the measure of stocks in an uptrend (gray histogram) and the number of stocks trading above their 5 day simple moving averages (red line).
- Buy signal is generated for the open when the SPX is above its 200dsma and the red line crosses beneath 700.
- Sell signal is generated for the close when the red line crosses above 2500, or the trade is held for 25 days.
- Short signal is generated for the open when the SPX is trading beneath its 200dsma and the red line crosses above 2500.
- Cover signal is generated for the close when the red line crosses beneath 700, or the trade is held 25 days.
- Long trade lasts on average 24 days while short sell lasts on average 10 days.
2. The 2nd indicator is the Advance-Decline line (blue line) with a 50dsma plotted (gray line). My calculation is similar but not the same as Investopedia’s.
- Buy signal is generated for the next open when the SPX is above its 200dsma and the A-D line crosses beneath the 50 day average.
- Sell signal is generated for the close when the A-D line crosses back above the 50 day average.
- The average trade lasts about 15 days.
3. The 3rd indicator is the raw advancers and decliners, with the advancers being the green line and the decliners being the red line. There are also Bollinger Bands (purple) set 1 standard deviation beyond the 20 day average of decliners.
- Buy signal is generated for the next open after the decliners exceed the upper Bollinger Band.
- Sell signal is generated for the close when the decliners close beneath the lower Bollinger Band.
- The average trade lasts 5 days.
4. The bottom indicator is the measure of 52 week new highs new lows (histogram), with a 9dsma (yellow line) plotted over top.
- Buy signal is generated for the next open after the number of new lows exceeds the number of new highs.
- Sell signal is generated for the close when the number of new highs surpass the 9dsma.
- The average trade lasts 3 days.
Woody,
when you have time can you give us some back tested results/trades of your breadth trading setup.
thanks
Bill
Bill, thanks for reminding me. I meant to do that already. I’ll begin to trickle them out here shortly.
It’s quite difficult to look at the graph ,you may try to draw it in a large scale.