Friday, January 29, 2010

Tracking the Market With Individual Stocks


If you click on this screenshot from my trading station, you'll see the 40 stocks in my basket: five from the eight S&P 500 sectors that I track regularly.

If the price change is green, that tells me that the stock is up on the day *from its opening price*.

I also compare the current stock price to its volume weighted average price (VWAP) and see how many stocks are trading above and below VWAP.

Both perspectives are useful in gauging whether trading days are shaping up as trend days or range ones.

Early in the day, when I saw that an increasing number of the stocks were trading up from their open and above their VWAP, I was able to scramble out of a short position without damage. Many times, individual stock action can illuminate what's going on in the broader indexes.
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4 comments:

Tariq said...

Dr. Steenbarger,
I am constantly amazed at the quality of the information you provide. In my experience, one of the key factors in the failure of individual traders like myself ( self employed) is the lack of proper training ( hands on) from a reputable entity. I have looked into several programs but have not found one yet. All I could do is read 100 books and actively trade my own account( have placed 500 trades in a year just to learn and get the feel of the market). Why don't you offer a program for new traders. If not are you aware of one which might be woth looking into.

Best regards,
Tariq Malik
Hopkinton, MA

Thomas said...

I too am psychic; especially after making a bad trade. Or wait.. I meant to say psychotic...

BOYD said...

Ive seen that chart several times without an explanation of where to access that info or who sells it. For me i dont understand how it works from one chart. Does it read from left to right and go up and down like candlesticks?I notice there is a 0x at the top of every stack was that generated at the beginning or end? I think you assume too much when posting those charts. I would like to see a users manual link every time I see that chart to decode what you are trying to convey.

BOYD said...

Everyone makes bad trades. If everything was quantifiable or logical on any level it wouldn't be "the market" Ive found that trading is a game of losing. The more you concentrate on not making bad trades rather than on making good trades the better off you are. Of course in the final analysis trading itself is the problem. If you bought and held in Jan '09 you would have knocked it out of the park just like if you short and hold now. But you have to get out of your own way.