At TTTHedge.com trading we use several sentiment indicators to help keep us on the right side of the market.  One of the indicators we have added back since the market reset button was hit March 9th has been the new 52 week highs.  We use the TradeStation feed $52WNH which is for the NYSE .  These numbers are filtered and the TradeStation feed is not the same as published in the Wall Street Journal.  You can use either but you must be consistent.

The indicator is a great daily check to make sure the underlying sentiment is aligned with the price action. 

Every 30 minutes we publish the intraday New Highs via our twitter feed http://twitter.com/redsdata.  We use these to look for sentiment change intraday and to predict the closing value of the daily indicator.  The post look like:

$52WHN:NewHighs().  NYSE: 36 D1:-42% D5:-58% Score 4- http://ttthedge.com #TTTHedge $$. 9/2/2009 4:02:00 PM

Where:

• $52WHN:NewHighs().  = Name of the indicator in this case 52 week new highs
• NYSE: Which market (we also monitor the Russell 2000 and Nasdaq)
• 36  - The current number of New 52 Week Highs this point in time
• D1:-42%  - How we are tracking compared to the trading day before.  In this case we are 42% behind the last trading day at this time
• D5:-58% – How we are tracking against the 5 day average at this point in time.  In this case we are 58% behind our 5 day average
• Score range is 4+ to 4- with 4+ extremely bullish and 4- extremely bearish.  This was a bearish score
• Where to go to get interpretation of the indicator (here)
• #TTTHedge  - Hash tag for our members to use to filter
• $$ – Makes it available to the StockTwits community
• Date and time of the indicator data

Now I have the decoder ring how do I use it?

First you are looking for market sentiment.  In order for a market to rise higher the number of yearly highs must rise.  To take the market higher new highs must pile onto new highs.  Yesterday’s highs must become today’s highs and some new symbols must join the parade.  Investors must be willing to buy yearly highs.. that is hard to do. So if you see day-to-day strength (D1) is positive and (D5)  our 5 day average is positive than the market winds are behind you.

Second look for intraday strengthening and weakening.  Compare several posts and see if the percentage numbers are getting stronger or weaker looking for internal sentiment.

It is a great indicator.  Use it wisely..

Redliontrader

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Sometimes, like in an unfamiliar Mall, we need one of those information maps with a big arrow saying “You Are Here” in order to calculate how to get to our next location.  Here are today’s “You Are Here” posts.

Dow, SP500, Nasdaq, Rut Futures:

The Dow has pulled-back the least sitting above the 4% line, ES (SP-500) futures climbed back above the 4% line having violated it for an extended period of time.  The NQs have returned to the 4% line after a brief visit to 5% and the TFs (Russell-2000) futures have pulled all the way back to the 6% line and have only made it about 1/2 back to the 5% line.

Clearly amongst the sisters the TFs are the weakest.  All off them have had a more severe pullback than our last in term of percentages.

Where we are as of this morning at 7:00 am:

You can see that the YM is returning to that 9330 area to attempt a climb out of this pullback, the ES has it battles at around 1000.  The NQ is the strongest but has now attempted 3x to climb up and over the 1601 level so this has turned into serious resistance which  if over hopefully becomes good support.  The TFs continue to show weakness and need to move to the 560 area just to catch up chart-wise to her other sisters.

The rally from the last pullbacks to the tops were about 6% rallies for YM, ES and NQ and 8% for the TF.  If you think we will rally back up to the top ride the TF wave (IWM, UWM 2x, TNA 3x) for best returns.

Trouble in River City.

 

Last night I posted an update on the Zweig charts on the members website. That pointed out some troubles as we are in uncharted territories.  Yesterday’s RED bar was problematic for me.  I now will suspect the next up bars expecting another pullback or two like our June 15th correction (3 legs down) or May 5th (2 legs down).  I still think as posted a couple of days ago we will rally back to the highs or at least close to the highs based on the pent-up sentiment, but  there may be some more down legs to make first.

happy trading

-RLT