Monday, September 14, 2009

Inferring Stock Market Trending by Identifying the Trend Status of Active Stocks

Just a quick note to highlight a resource that Henry Carstens has recently made available. He is tracking the trend status, not only of the stock indexes and sectors, but also the high volume stocks. He is posting the trend status of those stocks via Twitter.

The idea here is that, in a range market, you'll have a relative balance between the number of stocks showing uptrends and those indicating downtrends. A large number of issues will not trade in trending mode at all. (That is what has emerged thus far this morning). Conversely, when we see the market develop a trend, that should show up as an increasing and significant number of high volume stocks trading directionally.

The logic is a bit like my tracking of the number of stocks in my basket that are trading up vs. down from their opening prices (also posted to Twitter). I will be following up with this idea further; it's a promising framework for active traders who need to ascertain day structure as early in the session as possible.