TrendTRAKR.for US Equities and US Sector ETFs

Transcription

1 TrendTRAKR.for US Equities and US Sector ETFs Tutorial I - Overview Gregory T. Weldon

2 TrendTRAKR Tutorial I Topics Covered Overview & Purpose of TrendTRAKR Weldon s Trend Momentum Indicators TrendTRAKR Tool WalkThru Tutorial II: Strategic Insights (Live Examples of How to Use TrendTRAKR)

3 Overview & Purpose of TrendTRAKR What is Weldon s TrendTRAKR for US Equities? Daily tool for traders, advisors, portfolio managers and investors who actively trade or are invested in the US Equities markets. The TrendTRAKR tool identifies which stocks/etfs are showing a newly developed trend, a strong trend or a trend that is at risk of reversing. What is the coverage specifically? Standard & Poor s 500 Stock Index US Equity Industry-Sector Index Exchange Traded Funds What is the Value of TrendTRAKR? Our general rule of thumb in our trading has been to profit from trends and trend reversals. Our TrendTRAKR tool that offers subscribers exclusive access to our proprietary Trend Momentum Indicators (TMIs) which are quantitatively driven algorithms that define trends over numerous timeframes (both bullish or bearish). In our TrendTRAKR for US Equities, we reveal our daily TMI readings for the S&P 500 stocks and the US Sector ETFs. This will be a daily publication, in an Excel format, that allows you to sort the TMI data any way you wish (we ll review all 4 worksheets in this tutorial). TrendTRAKR can be utilized by both systematic traders, who may wish to create rules around the various readings, and/or can be used in the way that we personally use it, as a technical toolkit designed to assist with discretionarily driven trading-investment decisions. TrendTRAKR does NOT take into account individual risk tolerance and individual investment objectives which is why it is not designed to be a trading advice tool but rather an input tool to be used at the discretion of the investor/trader based on their own risk tolerance and investment objectives.

4 Weldon s Trend Momentum Indicators This Section will review, in detail, what our Trend Momentum Indicators are and how to interpret the daily readings of the Headline TMI, the Med-Term Ratio and the Long Term Ratio in discerning tradable moves TOPICS TO BE REVIEWED Our Trend Momentum Indicator HEADLINE TMI Reading The Med-Term Ratio MTR The Long-Term Ratio LTR How we Categorize the various stages of a Trend

5 Weldon s Trend Momentum Indicators The Headline TMI Our Trend Momentum Indicator TMI Positive & Negative HEADLINE Readings We seek to to profit from trends AND trend reversals. Trend Momentum Indicator s (TMI s) are based on our proprietary momentum algorithms honed and tested for over 25 years. We begin with the premise that the market s trend direction has already been established, and that the purpose of our TMI is to provide a relative gauge of the strength in the momentum driving a particular market move (bullish or bearish). The direction can be BULLISH or BEARISH A POSITIVE reading is a pre-requisite for taking risk exposure. Markets that reflect a Negative TMI % reading are in a correction relative to the dominant trend, or, are not exhibiting momentum characteristics associated with a trade-able trend which we define as being neutral. The higher the POSITIVE headline TMI percentage, the broader, deeper, and greater, is the momentum push behind a trend. Examples: reading from 0% - 100% suggests a newly emerging trend (position taking optional) reading between % suggests a dominant trend (warrants full position) reading above 200% suggests an over-weighted position (cautionary position taking/holding - watch list) reading above 300% suggests an over-weighted position, but also indicates a rapid rise in market volatility (mandates a tightened risk-stop profile) reading above 400% suggests high risk momentum and an over-heated state

6 Weldon s Trend Momentum Indicators Med-Term & Long-Term Ratio The Med-Term Ratio MTR The Long-Term Ratio LTR Positive & Negative Ratio Readings Divergence MTR and LTR The MTR or Medium-Term Ratio [Column K] and the LTR or Long-Term Ratio [Column N] are separately calculated components of the overall headline Trend Momentum Indicator. For a headline Trend Momentum Indicator signal to be valid both the Med-Term and Long-Term Ratios must be positive The Med-Term and Long-Term Ratios gyrate in a normal range of to (-) 1.00, though they can move above and below these levels during exceptionally volatile markets (very rare, and indicative of a white-hot bull-or-bear trend above or, a sharply correcting market below (-) The value of looking at these two indicators, separately from the headline Trend Momentum Indicator (TMI Column) is to note the interplay between the two, in terms of which one is higher, and, how high they each are. The higher med-term ratio reading, the more powerful the momentum is over that particular time-frame (med-term (days) or long-term (weeks). Preferably, both the MTR and LTR are in the mid range between and are rising together in line with a strengthening headline TMI reading. A very high MTR and low LTR ratio indicates a market that has moved quickly and sharply, in a new trend direction, and may become extended in the short-term, until the long-term ratio can catch-up. This often reflects the MEAT of a first leg move, within the context of a longer-term trend. These are optimum opportunity points.

7 Trend Momentum Indicators MTR and LTR altogether The relationship between the Headline TMI the Med-Term Ratio and Long-Term Ratio dictates how we categorize the status or stage of a trend For Example, if the TMI is (+) and The MTR is (+) and The LTR is (+) = it s a VALID Trend But if the TMI is (+) and The MTR is (+) and The LTR is (-) = it s not a VALID Trend but there s potential it can turn into a valid trend

8 TrendTRAKR How we categorize the Stages of a Trend Our TrendTRAKR worksheets for S&P 500 Stocks and the ETFs offer these sortable categories for all items in order to assist you in catching trends and trend reversals in your day-to-day trading decisions NOTE: At any point after the TMI turns (+) it can turn back to Negative(-), at which point this developing or developed trend would end 3 Potential Trend 4 Newly Trending Headline TMI is Positive (+) AND, Both the MTR and the LTR are now Positive (+) 5 Trend Strengthening Headline TMI is Positive (+) and the CHG from yesterday is (+) Both the MTR and the LTR are (+) 6 Trend Weakening Headline TMI is still Positive (+) but CHG is Negative (-) from yesterday 2 Watch List Headline TMI is between (minus) -50 and 0 Headline TMI is now Positive (+) But, the MTR and/or the LTR is Negative (-) 1. No Significant Trend Headline TMI is Negative (and not greater than minus (-50) Headline TMI has turned Negative (-) Depending upon how the TMI changes, That will dictate where the trend starts again on the ladder 8. X = not enough data to calculate the Long Term Ratio 7 End of Trend

9 TrendTRAKR Tool WalkThru A WalkThru Sortable Worksheets 3 4 Trend Snapshot Sector Snapshot S&P 500 Index TrendTRAKR US Sector ETF TrendTRAKR Ranking & Sorting by Status of a Trend, Sector, Trend Direction, TMI, Long Term Ratio (LTR), Med Term Ratio (MTR) and more Inside Excel workbook, select the 3 rd or 4 th tab on bottom of file to view the Sortable TrendTRAKR Worksheets

10 An Overview of Columns in our Sortable Worksheets A. Click the arrow to select the category (in this case newly trending )-next slide discusses this more B. Stock Symbol C. Company Name (or ETF name in the ETF TrendTRAKR worksheet) D. Sector Name E. Blank column F. Direction of Trend (Bullish or Bearish) or Neutral when there is no significant trend or a trend ended G. Blank column H. Headline TMI # (when this # is positive, a trend has developed (bullish or bearish) I. The Change in the TMI # from previous market day J. Blank column K. Med-Term Ratio (MTR) L. Change in Med-Term Ratio from previous market day M. Blank column N. Long Term Ratio (LTR) O. Change in LTR from previous market day P. Blank column Q. Price at yesterday s close R. Change in price from previous day s market close price

11 S&P TrendTRAKR Worksheet vs ETF Worksheet Both Worksheets have SAME Sorting Functionality Both have SAME Trend DIRECTION Options SAME Definitions and USE of Headline TMI Readings, MTR Readings and LTR Readings Many SECTOR names are the same but there are a few new Sector Differences See Table Below S&P TrendTRAKR Sectors Consumer Discre/onary Consumer Staples Energy Financials Health Care Industrials Informa/on Technology U/li/es Materials Telecommunica/on Svcs ETF TrendTRAKR Sectors Consumer Discre/onary Consumer Staples Energy Financials HealthCare Industrials Informa/on Technology U/li/es Natural Resources Real Estate Strategies

12 3 rd and 4 th Worksheet Sortable Worksheet Watch List Category Stocks or ETFs in the Watchlist Category are ones to keep an eye on for a potential trend (which may may not play out) They are identified as ones whose Headline TMI is between -50% and 0% and the Change in TMI is positive when and if the trend actually develops, the Headline TMI turns positive and the stock or ETF will show as POTENTIAL TREND February 13 th appears on WatchList with a TMI reading of -35% and the CHG is (+) Apple Inc. February 21 st Has appeared on WatchList every day since the 13 th and shows as -1% on Feb 21st Apple Inc. THE MTR & LTR DO NOT APPLY YET as the Headline TMI is still Negative So, we know the trend is not developed however the TMI Headline # is In that Negative -50 to zero range so we start to pay attention to this as an Item that could become a potential trend we would need the TMI # to turn Positive for that to be a consideration

13 3 rd & 4 th Worksheet Sortable Worksheet Potential Trend Category Stocks or ETFs newly trending are those whose Headline TMI is now POSITIVE (Column H) and Either the MTR is now Positive (+) or the Long Term Ratio is now Positive (+) but either the MTR OR the LTR is still Negative (-) On February 22nd, Apple shows as POTENTIAL TREND as the TMI turned positive AND the MTR is positive but LTR is still negative so it s moved to a potential trend, not a valid trend or newly trending. Apple Inc. TMI AND MTR ARE BOTH POSITIVE BUT the LTR is negative Note: Not every Watchlist item reaches the potential trend stage

14 3 rd & 4 th Worksheet S&P Sortable Worksheet Newly Trending Category Stocks or ETFs newly trending are those whose Headline TMI is POSITIVE (Column H) and the Change from yesterday is positive (Column I) and the Med Term Ration AND Long Term Ratio are also BOTH Positive (+) Apple Inc. Note: Not every item from Newly Trending reaches the next stage, the trend strengthening stage Notice the TMI is positive and The MTR and LTR are also positive (+) = A VALID TREND You can further sort by SECTOR and TREND DIRECTION (in the case below, we sort by newly trending AND by Sector Consumer Discretionary AND by bearish direction) Keep in mind: A bearish trend is valid when headline TMI is positive, MTR is positive and LTR is positive just like a BULLISH trend.

15 3 rd & 4 th Worksheet S&P Sortable Worksheet Trend Strengthening Category Stocks or ETFs in this category are those whose trend has been solidified (either bullish or bearish) The Headline TMI remains POSITIVE and the Change in the TMI is positive or unchanged (0) Both the MTR and the LTR remain Positive (+) This Is a Sort of Trending Strengthening Category in Column A and the Industrials Sector in Column D and BEARISH Direction in Column F Notice the Headline TMI remains (+) and the CHANGE in TMI is (+) and the MTR is positive as is the LTR

16 3 rd & 4 th Worksheet S&P Sortable Worksheet Trend Weakening Category Stocks or ETFs in this category are those whose Headline TMI remains POSITIVE but the Change from yesterday is negative This Is a Sort of Trending Weakening Category in Column A and the Financials Sector in Column D and BULLISH Direction in Column F Notice the CHANGE In TMI for all is (-)

17 3 rd & 4 th Worksheet S&P Sortable Worksheet End of Trend Category Stocks or ETFs in this category are those whose Headline TMI has moved to less than 0 And a Negative change in that has a larger negative value than the current TMI The Direction changes to NEUTRAL This Is a Sort of End of Trend Category in Column A Notice the Headline TMI is less then 0 Notice the values of the negative changes in TMI (they are larger than the headline TMI) And the Direction has changed to Neutral from either Bullish or Bearish

18 3 rd & 4 th Worksheet S&P Sortable Worksheet x Category Sometimes we end up with Misfits who end up with zero data in the LTR column due to lack of history When the LTR cell does not populate with accurate data, the stock or ETF defaults to a Misfit Category or x As we don t have evidence of the sustained Trend Direction Some of the colors will still comes thru as the Trend s Direction was established early on but the lack of LTR data overrides The continuation of confirmation of the trend s direction Notice there is no data in the LTR field so it defaults to x

19 TrendTRAKR Tool WalkThru A Walk Thru All-Four Worksheets Trend Snapshot Sector Snapshot S&P 500 Index TrendTRAKR Sortable Worksheet US Sector ETF TrendTRAKR Sortable Worksheet Inside Excel workbook, select the first tab on bottom of file to view let s start with the Trend Snapshot

20 Trend Snapshot Worksheet Trend Snapshot (for S+P 500 & US Sector ETFs) Top-Thirty Top 5 Newly Trending Top 5 Trend Strengthening Top 5 Trend Weakening Top 5 End of Trend.all categories above are revealed for both the S&P 500 Index Stocks and US Sector ETFs in our Daily Trend Snapshot Sample Trend Snapshot: Next Slide

21 1 st Worksheet - TREND SNAPSHOT

22 TrendTRAKR Tool WalkThru A WalkThru Sector Snapshot Worksheet 2 Trend Snapshot Sector Snapshot S+P 500 Index Sectors --- Percent Stocks in Sector Bullish S+P 500 Index Sectors --- Percent Stocks in Sector Bearish S&P 500 Index TrendTRAKR Sortable Worksheet US Sector ETF TrendTRAKR Sortable Worksheet Inside Excel workbook, select the 2 nd tab on bottom of file to view the Sector Snapshot

23 2 nd Worksheet SECTOR SNAPSHOT S&P Sector Snapshot worksheet provides a closer look, by sector, at the percentage of stocks that are showing a 'bullish' trend momentum vs. the percentage showing a 'bearish' trend. The graph chart on bottom of this worksheet depicts the net % for each sector (see next slide) Sample is from March18, 2013 See Net % Graph on next slide

24 2 nd Worksheet SECTOR SNAPSHOT (cont d) Chart below is at the bottom section of SECTOR SNAPSHOT Worksheet. The chart depicts the Bullish-Bearish Net Percentage for of stocks for each sector and the overall Net % for the S&P 500 Index. Themes emerge here in terms of which sectors are having the strongest influence on the overall S&P 500 Index. Other sector specific themes can emerge Sample from March 18, 2013

25 2 nd Worksheet SECTOR SNAPSHOT (cont d) Zoom shot below is bottom section of SECTOR SNAPSHOT Worksheet: Chart depicts the Net % Bullish-Bearish for each sector and the overall Net % for the S&P 500 Index. Themes emerge here in terms of which sectors are having the strongest influence on the overall S&P 500 Index. Sample from February 13, 2013 Sample from March 4, 2013 Big Shifts in Sectors impact overall S&P

26 Coming Soon TrendTRAKR Tutorial II Greg s LIVE Strategic Insights and How-to s TrendTRAKR for US Equities Free Two-Week Subscription Offerings Annual Subscription $ Month Subscription $750 3 Month Subscription $450 Multi-Reader Institutional Rates also available eileen@weldononline.com for more info Gregory T. Weldon