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Strategic Capital Research (SCR): Tweets Written on All SCR Financial Research, Analyses, and Capital Investing (ETF, ADRs, and Stocks), with

Trading Strategies, and Global Forecasts

Reports from Daily: Forecasts are revised each weekday and our tweet archives posted below include comments on both the forecasts and the findings from the daily sectional revision. For those of you who are also Stock & FX junkies, we post our research excerpts and forecasts (often with strategies) on both StockTwits and FxTwits :-). Enjoy!

The SCR Analysts.

Policy: To the above financial posts, the usual disclaimers apply:
(1) The researchers at Strategic Capital Research, LLC are not licensed advisors. Therefore, we recommend that you seek counseling from your licensed financial advisor or broker in making your own financial and investment decisions.
(2) Market changes can quickly make research results obsolete. No responsibility can be accepted for losses that may result from investing and/or trading based on the research in this publication. Use your personal risk level in determining the additional research needed on investment securities.
(3) No endorsement is being made on the funds (mutual, index, or ETF) chosen.
(4) Since all Strategic Capital Research reports provide research that is conducted using historical data, a reminder needs to be made that the analysis of past market reactions cannot predict future market actions. In particular, no amount of historical data can predict the sudden changes that occasionally occur in financial markets.
(5) The potential strategies listed on this page are produced from a financial researcher’s perspective in an attempt to use historical data to determine investing and/or trading strategies with a higher than average probability. The probabilities, however, in most financial transactions are only slightly better than a Las Vegas roulette wheel spin (and without the house’s double aught advantage). We do our best as researchers, but there are no guarantees.
(6) Company policy prohibits employee purchase of research securities until after an email has been sent to our SCR Finance Email List. By the time this page is published, however, some SCR employees may own shares of the reported securities.
Affiliation: As you can see from viewing the selections in our two bookstores [SCR] Edu: Bookstore (1) and [SCR] Edu: Bookstore (2), we have a business affiliation with Amazon.com. Your purchase of any finance product from Amazon through a link on SCR helps us offset the cost of maintaining the many free finance education & strategy pages.

Market Type – Indicators: In your study of useful market type indicators, you should realize that lagging indicators (moving averages, etc.), useful in determining trending markets, typically fail in the more cyclic trading markets. Inversely, you should realize that leading indicators (oscillators, etc.), useful in determining trading markets, typically fail in trending markets. This is a major reason why determining the market type takes priority before determining investing and/or trading strategy. The following are possibly useful indicators:
(1) Trending Markets: Trending market indicators are generally “lagging indicator - moving averages” and the following can be used: Linear Regression Slope with R-squared (econometric); Directional Movement System with +DI, -DI, and ADX (technical); Relative Momentum Index (fundamental).
(2) Trading Markets: Trading market indicators are generally “leading indicator - oscillators” and the following can be used: Random Walk Index (econometric); MESA Sine Wave (econometric & technical); Detrended Price Oscillator (fundamental).
(3) Volatile markets (either trending or trading): Determination of increasing volatility matters because the optimal type of investing strategy changes with shorter term trading having greater potential in relatively volatile markets. Buy and hold strategies, however, are quite productive and certainly more efficient in relatively less volatile markets. Volatility indicators are generally “price range measures” and the following can be used: Variable Moving Average (econometric); Average True Range (technical); Relative Volatility Index (fundamental). You will see in studying our research that we like to use the Average True Range because it takes into consideration price gapping in its calculation.
Protect Capital: Beware that market types can rapidly flip as a response to media reported global events. Market type changes also occur if the security is changing from a cyclical trading market to a trending market produced by changes in the economic environment and in the company financial underpinnings. Therefore, you should protect your initial capital and subsequent profits by using exit stops with all positions, and then by holding those positions until your chosen exit stop is triggered. This caution applies to any strategy used, to any security considered, and to any market traded. The forecasts exclude market reactions to media driven events (i.e., surprise central bank announcements). Obviously, predictions of surprise events are beyond doing with even the best historical databases.
Hedge Risk: Diversifying your portfolio by including securities that are inversely correlated will help provide a risk hedge. Because of the usual inverse correlation sovereign bonds (U. S. Treasuries as an example) have to equities, including them in your portfolio will help offset the risk to a stock market sell off. This inverse correlation usually extends to municipal bonds but not necessarily to corporate bonds.

Overall Bullish Bias: Fairly strong buying pressure and money flows that are producing an upward cyclical price direction.
Overall Bullish Neutral Bias: Security market potentially changing from a generally trending market (upward cyclical price direction) to a more neutral trading market (horizontal cyclical price direction). In this forecast, you should watch your exit stops carefully. Strategy: Possibly hedge risk on any long positions with alerts, exit stops, or options.
Overall Neutral (from bullish trend market) Bias: Fluctuating buying and selling pressure with fairly equal money flows that are producing generally a horizontal cyclical price direction.
Overall Neutral Bearish Bias: Security market potentially changing from a generally neutral trading market (horizontal cyclical price direction) to a generally trending market (downward cyclical price direction). In this forecast, you should prepare your watch list of securities to sell or short.
Overall Bearish Bias: Fairly strong selling pressure and money flows that are producing a downward cyclical price direction.
Overall Bearish Neutral Bias: Security market potentially changing from a generally trending market (downward cyclical price direction) to a more neutral trading market (horizontal cyclical price direction). In this forecast, you should watch your exit buys (for shorts) carefully. Strategy: Possibly hedge risk on any long positions with alerts, exit stops, or options.
Overall Neutral (from bearish trend market) Bias: Fluctuating buying and selling pressure with fairly equal money flows that are producing generally a horizontal cyclical price direction.
Overall Neutral Bullish Bias: Security market potentially changing from a generally neutral trading market (horizontal cyclical price direction) to a generally trending market (upward cyclical price direction). In this forecast, you should prepare your watch list of securities to purchase.

Econometric Analysis: The use of mathematics, probability, and statistics to analyze economic data.
Technical Analysis: The use of known price and volume data to analyze a stock’s price potential.
Fundamental Analysis: The use of both qualitative and quantitative techniques to determine the underlying supply and demand structure of an entity (sector, industry, company, etc.).
Indicators – Definitions: Expanded definitions (beyond the glossary definitions listed below) for the various indicators mentioned on this page can be found on the following finance dictionary sites: Free Finance Dictionary, Yahoo! Glossary, Global Finance Glossary, and Investopedia Dictionary. Strategic use of these tools can be found on the following SCR pages: Strategies: From A To Z and Strategies: By Type.
ADX (Average Directional Change): ADX is the 14-day exponential moving average of the price movement used to determine if the security’s price path is in a trending mode (positive or negative price path) and suitable for a trend following system. It is one component of the Directional Movement System designed by J. Welles Wilder. (1) Trending Market: As a general rule, a trend is indicated when the ADX is greater than 15, and an accelerating trend (either positive or negative) is indicated by an increasing ADX; (2) Trading Market: As a general rule, a trading range (horizontal price path) is indicated when the ADX is less than 15. Once the ADX reading extends above 40, the potential increases for a price extreme (overbought or oversold) to occur along with the increasing potential for the eventual correction. The ADX is useful in most market types with the exception of a deep “V” shaped correction. Thus, it is best to use it along with other indicators. (Reference Author: Wilder, New Concepts in Technical Trading Systems)
ATR: Average True Range is an exponential moving average that measures a security’s true volatility by including price gaps in the range calculations. A higher than historical ATR indicates greater than average price volatility. In forecasting, the ATR can be used as a rough estimate of potential “near term” price movement and return by indicating the commitment or enthusiasm of traders (either bullish or bearish). While high volatility indicates higher risk, it also indicates higher potential return sufficient to cover trading expenses. Thus, it is only with high volatility securities (high ATR) that short-term trading is profitably possible. In contrast, low volatility (low ATR) often indicates sideways price movement in a trading market with a tight cycle. The ATR is frequently used in determining the stop in an exit strategy to keep from being “stopped out” within a security’s typical price range. (Reference Author: Wilder, New Concepts in Technical Trading Systems)
MACD Osc: The Moving Average Convergence Divergence (MACD) moves up and down within a band to attempt to measure the cyclical nature of a price series. The oscillator, which fluctuates above and below zero, is calculated by subtracting the signal line value from the MACD line value. It is frequently used to give price path direction. (1) Trending Market: As a general rule, a positive or negative MACD Oscillator along with an ADX greater than 15 indicates a trending market, (2) Trading Market: As a general rule, a MACD Oscillator hovering around zero along with an ADX less than 15 indicates a trading market. (Reference Author: Appel, Technical Analysis: Power Tools for Active Investors; Reference Source: Global Investor - Finance Glossary)
Predictive Regression: A mathematical technique used to explain and/or predict. The general form is Y = a + bX + u, where Y is the variable that we are trying to predict; X is the variable that we are using to predict Y, a is the intercept; b is the slope, and u is the regression residual. The a and b are chosen in a way to minimize the squared sum of the residuals. The ability to fit or explain is measured by the R-square. (Reference Source: Yahoo! - Finance Glossary)
Relative Strength Comparative: Movement of a stock price over the past year as compared to a market index (like the S&P 500). A value below 1.0 means the stock shows relative weakness in price movement (underperformed the market); a value above 1.0 means the stock shows relative strength over the one-year period. Equation for Relative Strength: [current stock price/year-ago stock price] divided by [current S&P 500/year-ago S&P 500]. Note this can be a misleading indicator of performance because it does not take risk into account. (Reference Source: Yahoo! - Finance Glossary)
TEMA: Triple Exponential Moving Average is a composite of three different moving averages that has less lag time in tracking a security price. (Reference Source: Global Investor - Finance Glossary)
TRIX: Rate of Change of the Triple Exponential Moving Average for a price series. It is the slope (i.e. derivative) of a triple-smoothed exponential moving average. (Reference Source: Global Investor - Finance Glossary)
VWAP: Volume Weighted Average Price is the price of a security that is divided by the security’s trade volume over a given period. (Reference Source: Global Investor - Finance Glossary)

Textbooks-Econometric, Technical, and Fundamental: Econometric Analysis-Greene, Econometric Analysis; Technical Analysis-Pring, Technical Analysis Explained [Note: This text is foundational; however, we would recommend any of Martin Pring's books for self-study.]; Fundamental Analysis-Koller, Valuation: Measuring and Managing the Value of Companies [Note: Also read any of Aswath Damodaran's valuation books.]