Market Diary

Preface: Navigating the Business of Trading Before immersing oneself in the world of trading, it is imperative to embark on a systematic study of the trading system. Understanding your own identity and behavior, especially in times of panic, is a fundamental aspect of trading. Delving into the intricacies of trading psychology becomes crucial for a trader, laying the groundwork for informed decision-making and emotional resilience. Identifying Tradable Assets: Fundamental Analysis As traders venture into the markets, it is paramount to comprehend the nature of the commodities or instruments they choose to trade or invest in. Factors such as trading volume, liquidity, and the fundamental performance of the underlying asset come into play. Conducting a thorough examination of the company's fundamentals, including financial health, profitability, and debt levels, sets the stage for a well-informed approach. Creating and regularly refining a shortlist...

Deciphering Stock Market Price Action Deciphering Stock Market Price Action: The Art of Distribution Understanding price action in the stock market is akin to deciphering a complex code that holds the key to profitable trading. In 2023, examining the Standard & Poor's 500 Index (SPX) reveals a fascinating narrative—30 weeks of upward momentum counterbalanced by 20 weeks of downward movement. As traders, recognizing the importance of this price action is paramount. Importance of Price Action: Price action is the heartbeat of the market, reflecting the collective decisions and sentiments of traders. In the current scenario, with an equal number of weeks favoring bulls and bears, discerning the slight skew towards the upside or downside becomes crucial. This delicate balance underscores the need for traders to navigate the markets with a nuanced approach, acknowledging the subtle directional tilt that may influence future movements. Nor...

Downside Strategies in a Volatile Market Downside Strategies in a Volatile Market 1. Protective Put Strategy Description: Buying a put option to hedge against a decline in the value of an underlying asset. Benefits: Limits downside risk by providing the right to sell the asset at a predetermined price. Allows for participation in potential upside movements. Considerations: Involves the cost of purchasing the put option. The extent of protection is limited to the strike price of the put option. 2. Long Put Strategy (Bearish Put) Description: Buying a put option without holding the underlying asset. Benefits: Provides a leveraged bet on the downside. Limited risk (the premium paid for the put option). Considerations: Time decay (theta) reduces the option value over time. Requires precise timing to be profitab...

Long Term Market sentiment is still bearish . The McClellan Summation Index is a popular market breadth indicator that is ultimately derived from the number of advancing and declining stocks in a given market. It is derived from the McClellan Oscillator by tracking its daily accumulation or "summation". This provides a longer-term view of the McClellan concept. Many people regard it as an excellent indicator of the overall "health" of the market and the market's current trend. It was developed by Sherman and Marian McClellan and first presented in their book, Patterns for Profit (available from McClellan Financial Publications ).

Developed by Sherman and Marian McClellan, the McClellan Oscillator is a breadth indicator derived from each day's net advances, the number of advancing issues less the number of declining issues. Subtracting the 39-day exponential moving average from the 19-day exponential moving average of net advances forms the oscillator. Similar to MACD , the McClellan Oscillator is a momentum indicator that is applied to the advance/decline statistics. When the 19-day EMA (shorter moving average) moves above the 39-day (longer moving average) EMA, it signals that advances are gaining the upper hand. Conversely, when the 19-day EMA declines below the 39-day EMA, it signals that declining issues are dominant. As a momentum indicator, the McClellan Oscillator attempts to anticipate positive and negative changes in the AD statistics for market timing. Buy and sell signals are generated as well as overbought and oversold readings. Usually, readings above +100 are considered ov...