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Chapter 10. Putting It All Together: Org... > The Second Step: Check Out Market Mo...

The Second Step: Check Out Market Mood Indicators and Seasonal Cycles

  • Maintain and keep track of the Nasdaq/New York Stock Exchange Relative Strength Indicator. (See Chapter 2, “Two Quick-and-Dirty Stock Market Mood Indicators.”) The stock market has generally produced superior rates of return in virtually all market sectors during periods when the Nasdaq Composite has led the NYSE Index in relative strength. In addition to the formal techniques for defining the position of this indicator described in Chapter 2, you might maintain MACD readings and moving average trading channels based upon weekly levels of this relative strength indicator.

  • Maintain and keep track of the Intermediate Monetary Filter, described in Chapter 2, which, like the Nasdaq/NYSE Index Relative Strength Indicator, can be employed to separate investment climates during which stocks are most likely to thrive from investment climates during which stocks generally show relatively small gain.

  • Seasonal influences as well as cyclical forces (see Chapter 5) provide their own market mood suggestions. A favorite! The three-month period between November and January has a strong bias to the upside. October historically has been a month that sees the completion of market declines.


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