Here I shall introduce a new S-Trader custom indicator called "S-Trader Volumetric".
Extracted from Investopedia website. "Volume is an important indicator in technical analysis as it is used to measure the relative worth of a market move. If the markets make a strong price movement, then the strength of that movement depends on the volume for that period. The higher the volume during the price move, the more significant the move."
An example chart of Barrick Gold Corp (NYSE : ABX).
From the chart, we can observe those price action that made 3/6/9/12-month High followed with strong volume. (As highlighted by Blue Colour Arrow). However, it can be quite challenging for some untrained eye to use raw volume to make judegement whether it is average, high or very high/ultra high volume. S-Trader Volumetric is developed to overcome that matter. Please take note that the Volumetricis a supplement indicator to the existing Volume indicator and not a replacement. An example chart is shown below with S-Trader Volumetric.
The table below illustrates the Volumetric representation.
Notice that its much easy for the users to interpret the relative volume using Volumetric. All those volume indicated earlier by the arrow can be shown as High relative volume rather than a subjective expression (such as strong or higher volume).
In the previous posting, I discovered a huge opportunities missed when one uses the 52-week High/Low strategy especially the market rebounds from its low or reverses from its high prior to hit 52-week High or Low. I decided to seek an alternative time period to complement the existing strategy.
It's mind boggling when I started this task. If the extension is too short it will limits the usefulness of it. But if the extension is too wide it will creates more confusion to the traders/investors. Then I came across a website with some useful information.
Attached below is the snapshot from the website with highlights on the section consists of the info. (Website source : www.barchart.com)
Under "Percent Advances/Declines", there are set of different time periods. A good references.
With that info, I have created 2 new custom indicators called "S-Trader Multi Month High Low". and "S-Trader Multi Year High Low" to complement "S-Trader 52-week High Low". The Multi Year will consists of 1-month, 3-month, 6-month, 9-month and 12-month.
As for the Multi Year, it includes the following period: 3-year, 5-year, 7-year and 9-year.
After looking at several indices - Dow Jones Industrial Average (DJIA), S&P500, Hang Seng Index (HSI) and Straits TImes Index (STI), it's quite fascinating to see how this strategy turns out on indices from different regions.
From the look of it, the market actions is quite like what been stated in our earlier blog topic "Introduction - 52-Week High / Low" posted on 7 May 2016. When the market exceeds its 52-week high or low, it is not necessary the market actions continue it's preceeding direction but it may reverses.
Seeing that, it makes the analysis more challenging if one to use solely this strategy.
We also noticed the huge opportunities miss when one applies this strategy. Take a look at the chart below.
(Posted earlier on 15 May 2016 under "52-Week High Low Case Study - Dow Jones Industrial Average (DJIA)").
During the US Subprime Mortgage Crisis, it made a low of 6,469.95 on 6 March 2009 and the market rebounded to 52-week High of 10,228.20 on 9 Nov 2009.
A total of 3,758.25 points gained from the rebound.
Another example of chart (attached below) with huge points gained from the rebound in comparison to the 52-week High break out.
Big Fat Rabbit ! Huge opportunities not to be missed for long position traders.
