Long-time members know that I like to use TradeStops to help me follow the markets and determine their conditions. It’s still possible to use TradeStops, but now there’s a better way to follow the markets that gives me even more information than was possible before.
Let’s take a look at the old way of doing things. I’ve set up a couple of watch lists to help me follow the overall markets. The first watch list follows the major stock market averages. I call this my “Major Indexes” portfolio.
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These are the ETFs that represent the major market averages. As you can see, in one quick glance, it’s possible to find the Volatility Quotient (VQ) and the Stock State Indicator (SSI). Right now, four of the five are in the SSI Green Zone. Under the “Status” column, I make sure to have SSI alerts set up for these, so I’ll be notified when there’s a change in the condition of one of the ETFs.
I also follow the sector ETFs that make up the S&P 500. There are 11 ETFs, and I also have them set up to send out alerts if there’s a change in the SSI condition.
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Until recently, this was a great way to follow the markets and get notified when changes occurred. Of course, all of the information available was what we’re able to see on these pages. I wanted more information that would essentially be an x-ray into each index and sector, but this was all that was available at the time.
Late last year we introduced a better way. It’s the Ideas by TradeSmith Market Health pages. Here’s the top of the Market Health page that shows the condition of the U.S. markets and the most important foreign markets.
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Let’s take a look at the Dow Jones Industrials (listed here as the Dow 30). When we click on the link for the Dow 30, it takes us to a chart of the DJIA and a lot more information.
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The first thing that jumps out is the SSI Distribution. Knowing that the DJIA is in the SSI Green Zone is helpful, but being able to see what percentage of stocks are in the SSI Green, Yellow, and Red Zones is incredible. We can see from the bottom of the chart, that the percentage of stocks in the SSI Red Zone dropped for a few months beginning six months ago, rose a little over the summer, and dropped a little recently. This information is valuable to see if the trend is becoming more bullish or more bearish. Also, in the upper right hand corner of the chart is the 52-week range for the DJIA and where we are in relation to this range.
Here’s one more thing that’s fantastic to have: If you look above to the list of the different markets, you’ll notice a set of binoculars to the left of many of the indexes. Click on the one that’s to the left of the Dow 30 and see what happens.
It opens up a new window that shows all of the stocks that make up the DJIA! Here are the first few tickers that show up with all of the information an investor would want to see.
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We’re even listing how many newsletters and Ideas strategies there are for each of the stocks as well as the dividend yield, sector, and yearly change for each stock. This is a treasure trove of information for individual investors and all of this information can be accessed through just a couple of clicks.
We mentioned the ETFs for the sectors earlier. These, too, are available through the Market Health page.
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And we can pull up the same kind of charts that we saw earlier for the DJIA as well as the availability of the binoculars to see every stock that makes up each sector ETF.
Yes, the old way of doing things works, but this new way of using Ideas by TradeSmith is a more comprehensive way of looking at the markets and what’s happening at any one time. I’m using this new tool to help me understand the markets with greater clarity and to help me make better investing decision.
Next week, I’ll show you another way to use Ideas by TradeSmith to help find stocks that are of interest to you and fit your portfolio the way you want to manage it.
We’ll go over both of these articles in more depth on Wednesday, Aug. 21 at 1 p.m. Eastern during our educational presentation. Click here to register for our webinar. Even if you can’t make it at this time, be sure to register, and we’ll send you a recording later in the week.
Cheers,
Tom Meyer
Research and Education Specialist
