Welcome to the first II Insight, UK issue.
This is the first edition of a free monthly newsletter which we hope will quickly become a useful tool in your investment strategies.
This month, Dr Jackson Wong, Head of Analysis for II UK, looks at his top UK buys for 2013. Jackson will monitor this portfolio in each issue over the coming months.
We also take an in-depth look at Breadth indicators – one of our favourite technical tools for monitoring market trends. We feel that it's vital to maintain a feel for the prevailing market conditions and this indicator helps you adapt to meet the needs of these conditions.
We will be hosting a webinar with Dr Jackson Wong on the 13th February. If you would like to take part and discuss the markets with Jackson please email us at analysis@investorsintelligence.com with any questions or comments you may have and we will do our best to include these in future issues.
My alerts” helps prevent missed opportunities
How many times have we all said “I'll buy that stock when it falls back a few dollars”. The problem is, there are a lot of things to do in life and it's so easy to miss such pullbacks. II subscribers can use the “Set alerts” function on the website – just select you stock (or stocks), click on “Set Alerts” and fill in a price target (higher than or lower than). The system will send an email after the market close as and when your price targets are met . You can also place alerts on the system to notify you when a stock posts a P&F breakout, KDR or other technical events. All alerts set can then be managed or cancelled through the “My Alerts” section on the Portfolio tab.
Explaining breadth
Breadth indicators are invaluable technical tools for all investors. These indicators summarise the general trend of the market and determine whether the market rally is sustainable.
For many, the market averages such as the Dow industrials or S&P500 may be good enough. But breadth charts adds another layer to consider. In Investors Intelligence, we are provide an interesting array of breadth indicators to assist subscribers, including:
• Point-and-Figure Breadth charts
• %10 Week Moving Average Breadth charts
• %30 Week Moving Average Breath charts
• % Relative Trends Breadth charts
• Weekly Climaxes
In this month's newsletter, I want to expand upon the Breadth - Weekly Climaxes. Knowing that readers may be unfamiliar to this indicator, so let me explain further. First, there are two types of climaxes:
• a Buy Climax or
• a Sell Climax.
A Buy Climax means that a stock tops out and closes lower on the week; while a Sell Climax suggests that an instrument bottoms out and closes higher on the week.
To show this concept graphically, let us look at a recent Buy Climax in Europe - Erste Bank Der Oesterreichischen. The stock reached 52-week highs last week but had failed to sustain this rally. Instead, it corrected beneath the previous week's close (see below). This forms a typically Buy Climax. Since we can only determine if a climax is made after each week's close, the breadth is computed every Friday.
Why are these Buy/Sell Climaxes helpful?
Well, if many stocks are developing a Buy or Sell Climax simultaneously, then this is telling us that the current market trend is unsustainable and vulnerable to a reversal. Look at recent Buy/Sell Climax data for Europe. The region was showing a large number of Sell Climaxes during Jul-Aug 2011, which coincided with the index low of that year. This suggested that the downtrend is losing momentum. And while the index did retrace to the lows in November-2011, and again in June-2012, many stocks remained above their 52-week lows - meaning that the selling pressure was not intensified. A strong rally followed soon after.
We provide the Buy/Sell Climax data for all regions - US, UK, Europe, and Asia. Armed with these valuable data, investors are able to discover if the market is near a peak or bottom.
