Sunday, July 26, 2009

Sector Performance Update

Here is a quick sector performance update for the last 10 trading days, as you can see every sector performed well in this uptrend which doesn't surprise me at all. Things to note for this week XLF - the financials underperformed the overall market as well as defensive sectors like Health care and Consumer staples also underperformed the overall market. Generally the financials lead the overall market so it should be noted in case of a short term pullback.

Of course in my opinion the overall trend on all timeframes is up and every pullback reaction should be bought until signaled otherwise. Since we have broken long term trendlines to the upside I believe a lot of institutions will continue to throw money in this market so they will not be left behind. Again I will say let the trend be your friend, does it make sense for us to be at these price levels, NO. But if you follow the volume transactions of the large players (institutions) you can stay on the right side of the trade moreso than not. After all isn't our goal as traders to make money, shouldn't matter to us if it is by shorting or on the long side.

One thing I want to say, lately I have been realizing that Technical Analysis although good in its place, by itself is insufficent to consistantly make money in this market. Since the Decimilazation began in 2001 I believe, with the introduction of small spreads, large traders can in fact mainpulate the price of a stock in order to Accumulate/Distribute there positions before the move. I will not get into details but I will tell anyone listening is to study Supply / Demand and effective Volume intensly. That should be the core, the charts should be second because they are lagging indicators, they follow price and price only there is not enough on volume analysis in Technical Analysis to see what is going on behind the scenes.

I am working on a couple of projects that break each trading minute down, dissect it by volume and price movement (open, high, low, close) as well as supply and demand signals. So far the results are outstanding, but I still have more work involved to complete the system. I will keep everyone posted of the progress along the way.