Weekend Review New Years Post
After neglecting my writing for some time the New Year is as good as any to begin the practice gain. Upon reviewing 2014 I’ve decided to drop a few things from my tool box while replacing them with some fresher ideas that I’ve been working on. The first wrench that I plan to use more frequently is using sectors through tallying the stocks that are hitting new all time and 52-Week highs. I expect this approach to help me two fold: 1) By curating better watch list from stocks that meet my criteria and scans allowing me to focus more upon the hot sectors and 2) To accentuate my breadth readings through alerting me when defensive sectors are attracting more interest.
Looking at the past ten trading days and tallying the number of stocks hitting fresh highs and filtering them through MorningStar Industry Group in TeleChart, a clearer picture of what’s been gaining momentum over this time period emerges. Biotech has been the hot sector for much of 2014, and over the past ten sessions it continues to shine, however there has also ben an incrust in Utilities and REITs which I consider more defense oriented.
52 Week High by Sector
ATH by Sector
In addition to my standard breadth thermometer this year I’m also adding the difference between the number of stocks making fresh highs and lows over a 1, 3, 4, and 12 month period. Breadth tends to lead the indexes and using this information I plan on refining a complementary system based on taking advantage of index moves from the long and short side, particularly during periods where stock momentum is waning and momentum based tactics are performing poorly. This is something I’ve fiddled around with for some time but with a lack of clarity as to what exactly the objective was and how I could make it work on my time frame. Through this experience I’ve come to define a complete set-up with risk parameters that I can tolerate with comfort.
Hopefully I can keep up the pace this year and create better documentation for review and research as my ideas develop from this and my trading becomes more simplified and mechanical.
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