Interpreting Dumb Money Actions

Analyzing the dumb money's actions (what these investors are doing) will provide a fairly accurate investor sentiment reading of the market. There are all sorts of investor sentiment gauges out there, some shorter term and others longer term. There are several sentiment gauges that I like best and that line up well with the wind at your back method outlined in Chapter 6. The first sentiment indicator I will review here is the Rydex Cash Flow Ratio. Rydex is a mutual fund company that has both a...

Swing Prices Volume and Ord Volume

Moving on, let -5 compare Ord-Volume analysis to swing price and volume analysis, this time using the example of Novamerican Steel, Inc. (TONS). We covered Ord-Volume analysis of TONS in Chapter 3 (see Figure 3.16), but let -a look again in light of swing price and volume relationships to the Ord-Volume method. My goal is to show that volume analysis does give important information of what to expect in the price action of an issue. FIGURE 5.7 Candlestick Chart of Novamerican Steel (TONS) Shows...

Gold Stocks

Most of the focus thus far has been on the broader equities market. Even when we focused on individual stocks, we began our study by determining the trend of the overall market first, and then worked our way through sectors, and finally focused on individual stocks. In this chapter, we are going to focus exclusively on one sector gold. Although it may not be associated as much these days with the flight to quality that accompanies war and global catastrophe, even the word gold evokes a feeling...

Using Pmo Macd Indicators

Of all the momentum indicators out there, I like PMO, developed by Carl Swenlin. This proprietary indicator is based on a rate-of-change calculation, which is exponentially smoothed. PMO behaves similar to the MACD momentum oscillator developed by Gerald Appel. We use the weekly PMO and MACD on the indexes to pick trends that usually last from three to six months. Figure 6.13 shows the topping process in the S amp P 500 in January to March 2004, as discussed previously. Notice here that both...