Wednesday, April 23, 2014

A Quick Guide to PREP Tweets From @steenbab

Generally before the market open, I will send out tweets that are labeled PREP.  (You can follow the stream at StockTwits@steenbab).  PREP tweets capture some of the information I rely upon to prepare for the trading day.  Below is a guide to some of the abbreviations and the terminology used in those tweets:

Price Targets - These are generally for the overall market ($SPY) and represent price levels that I am targeting during the day session.  Please see this post for details.  We have a 73% probability of hitting either the R1 upside level or the S1 downside level.  The probabilities of hitting R2/S2 and R3/S3 are 54% and 37%, respectively.  Earlier targets are the overnight high/low and the previous day's high/low.  The odds of hitting more distant targets are increased if volumes are coming in higher than average.

BP/SP - This refers to buying pressure and selling pressure and is a measure of whether buyers or sellers were aggressive during the prior trading session.  BP and SP are two variables I utilize in market queries (studies of historical patterns in the market).

%DMA - This refers to the percentage of S&P 500 shares trading above a given moving average.  So, for instance %20DMA refers to the percentage of stocks in the S&P 500 universe trading above their 20-day moving averages.  It's another variable I rely upon in market queries.

Model - This refers to regression-based forecasts that I use to gauge $SPY over a 3-5 day time horizon.

Cycle - This refers to cycle-based forecasts that I use to gauge $SPY over a period of weeks to months.  Very experimental work.

New Highs/Lows - Unless otherwise specified, this refers to the number of common stocks across all exchanges trading at fresh 3-month highs/lows.  I look at this number to identify potential divergences.

CumTICK - This is a cumulative total of intraday NYSE TICK levels.  It basically takes 5-minute readings of $TICK and sums them like an advance-decline line.  A good overall indication of buying/selling dominance--bigger picture than BP/SP.

PC - Unless otherwise specified, this refers to the ratio of put options to call options traded across all individual equities, not including index options.  Useful sentiment gauge.

RelVol - How much volume is being traded at a given time of day compared with the average volume traded at that time of day.  Useful in gauging potential volatility.

%VWAP - Percentage of NYSE stocks trading above their day's volume-weighted average prices.  Useful in identifying trend vs. range days.

Delta - A measure of volume traded at the market bid vs. offer, pioneered by Market Delta.

Divergence - When an index makes a new high or low, but many sectors/stocks do not participate in the strength/weakness.  Helpful in identifying potential turning points.

I'll add to the list as we go along.  If you share your market preparation via Twitter or StockTwits, feel free to pass along your info as a comment to this post.  Thanks for the interest--