Wednesday, November 14, 2007

SummationChartReading

Dear Readers, Summation Charts display the internal combustion mechanism of the market. At any given time there are the early breakers ( those stocks that are showing fresh leadership) and those stocks that are (late stayers) the older leadership. Without major trends up and down or together with them the market constantly oscillates between groups ( see group strength tables we publish on weekends). This is really the bread and butter of the institutional/fund trading, I call it a GROUPTATION ( group rotation). So, as the market goes through the cycles of creating and destructing these new and old leaders the summation chart follows the sum of the first ( new leaders - early breakers) and second ( old leaders - late stayers). Now it is OK if at least one of these groups are strong, but if both falter that means that market has no old leaders and not new leaders ( do you think that kind of a market can move up a lot - I do not think so). So, in short the summation line is the sum of these new and old leaders across the time frames and one of the more spectacular sell signals we get when the YELLOW summation line rises ( about or above SPX price level ) and comes down ( FEBRUARY , AUGUST, NOVEMBER) drops all started this way!!! One of the better ways to view the summation chart is a "Market Breath/Depth oscillator". Now the reason it differs from all such oscillators is that it is based on our unique approach to "calculating" the "earlybreakers" and "latestayers". Unfortunately buck stops here, as we are not in a position to publish these proprietary concepts.
Learn the summation graph and you will be better off for it. Longer term summation charts indicate a general health of the market and one can look at them almost as a smarter substitute for A/D line. If these longer term charts trend lower, market is losing power ( as was the case since April 2007) and the opposite when they rise. Make friends with the summation chart.

4 comments:

Greenie said...

good morning boris. You have developed a very innovative method. Can you give me an example of earlybreaker or latestayer?


Thank you, G.

Greenie said...
This comment has been removed by the author.
boris said...

Dear Greenie,
for example today the following stocks are the NASDAQ's early breakers, can not relate to numbers, but just look at them.

"ALTR" 0003 0006
"AMGN" 0005 0006
"CELG" 0004 0006
"CHRW" 0005 0006
"KLAC" 0005 0006
"ROST" 0005 0006
"LNCR" 0004 0011
"CSCO" 0005 0012
"SNDK" 0004 0012
"QCOM" 0004 0016
"SIAL" 0004 0016
"EXPD" 0006 0019
"MICC" 0005 0019
"MNST" 0002 0019
"SBUX" 0004 0020

Remember these stocks could all fail tomorrow, especially if we are in the bear or minibear market. Just as an example though they seemed to show the leadership tomorrow.

No AAPL and GOOG and RIMM here Ha...?

Good Trading

Greenie said...

Thanks Boris. Most of them are small cap members, which get pushed up to hold the index, while da-boyz sell AAPL and RIMM.