The most powerful tool in Technical analysis; how can we make such a claim? Well, the answer is simple. We live in a world where fraud, deceit and manipulation are viewed as desirable traits. There is no such thing as free markets today. Only fools believe in the concept of free markets. As they say, only God create idiots, and only fools think they are Gods. In such an environment, you cannot rely on standard fundamental or technical analysis as all the data today is contaminated or manipulated. If the Feds stopped supporting the markets, they would collapse the very next day. Thus against this backdrop, the only thing that will work is if you have a way of determining the real trend. That’s where the Trend Indicator comes in. If we had, to sum up the trend indicator in one sentence, this is the statement we would make “a tool that magnificently combines the supreme elements of technical analysis with the most compelling elements of Mass psychology”.
Inception of the Indicator
After 2008, market manipulation took on a whole new meaning. Anything that could be would be manipulated. With this in mind, we knew we had to have an indicator that was operated on data that could not be manipulated. Fortunately, we had already been working on such a project, and the financial crisis pushed us into high gear.
We needed and wanted an indicator that did not depend on or rely on so-called by easily manipulated critical components such as volume, market internals, the number of new highs or new lows, moving averages of new highs or new lows, advancing or declining issue and a host of other data that was being manipulated. Volume is one of the key backdrops of most technical systems. Thus, we wanted a system that would never have to rely on such indicators or any other data that could yield false signals. We wanted an indicator that focused on price action and key psychological component, but one that was also extremely accurate; the trend indicator is the answer to this problem
With the trend indicator, the trend is recalculated on the hourly, daily, weekly, monthly and quarterly basis. For example on daily chart, each bar represents one day of data and on a quarterly basis, each bar represents one-quarter’s worth of data. We use mostly price data, some key psychological data that can be quantified and a few other key components that we calculate that are free of contamination. With the inception of the trend indicator, we no longer need to focus on the following
- There is no reason to identify so-called critical market turning points in advance to know which direction the markets are headed in. Many services issue targets but if the target is not hit or broken, then they conveniently provide you with an alternate scenario.
- This stress factor is eliminated from the equation with the trend indicator. As we already know the trend in advance, the strategy going forward is rather simple……….. If the trend is, up, all pullbacks are viewed as buying opportunities and vice versa
- There is no need to sift through meaningless data such as market internals, market volume, advancing and declining issues, Baltic Dry Index, Copper, and a host of other useless data…… Once upon a time, this data as useful and in some cases key to determining market tops or bottoms; today most of these indicators are on par with toilet paper.
Predict Market Tops and Bottoms in advance and with little to no stress
Imagine never having to worry about what the market is doing. Imagine knowing in advance if the market was topping or bottoming. Imagine knowing in advance that the so-called sharp correction the market is experiencing represents nothing more than a buying opportunity and not impending doom as the Talking heads at CNBC or other self-proclaimed markets gurus proclaim. Well, you do not have to imagine anymore; there is such an indicator, and it does what it says. However, please do not mistake market topping and bottoming with predicting the exact top or bottom. We are not going to insult your intelligence by stating we have such a tool. What we have is a tool that is highly accurate in determining whether a market is going to top, bottom or continue trending upwards. With this knowledge in hand, you have the power to plan your moves in advance. Fear and stress become relics of the past.
Why it’s the best Market indicator
Once the distraction of trying to figure out where the market is headed is removed from the equation. One can focus on the most important job of spotting the best plays poised to benefit from the current trend. Even if the data were not manipulated, knowing the trend in advance is simply priceless. Imagine how much more time you have on your hands to focus on trying to find the strongest plays to take advantage of the current trend. How much less stress you have to go through. If you knew in advance that the current downward move was just a pullback and not the beginning of a crash. You would react in a different manner as opposed to moving into panic mode and blindly looking for direction. With this knowledge, you would know in advance what strategy to employ. No longer would you be backed in the corner like a caged animal looking desperately for an exit. Instead you would be calm, confidence and ready to act as you would have planned your moves in advance. Time would be one your side and not against you. The trend indicator has been back tested with 50 years worth of data and in each case it came out with flying colours; In every instance it identified when a market was going to top or bottom. In some instances it was a bit too early, but we feel that it’s better to be early than late. Again, we are speaking of spotting a trend change, which means you might have to get in and out a bit early.
The trend is examined in multiple time frames. The ones we dedicate most of our attention to are the weekly and the monthly trends. The trend in the hourly and daily time lines are more suited for short term traders looking to jump in and out of the markets.
The trend is determined not via trend lines, but it is recalculated for each time frame (hourly, daily, weekly, monthly and quarterly) and this information is then combined with critical psychological data that can be quantified. The net result is an indicator that is not reliant on volume, market internals, and any other data that could be potentially manipulated. In fact, we have ceased to look at the volume or market internals, advancing or declining issues since we started to use this indicator, and the results are nothing short of remarkable. Look at some of our recent calls here.
Knowing the trend provides us with ample time to find the stocks that will perform optimally under the present market conditions. This enables time to offer stock trades in several categories for free; most other services charge for plays issued under each one of these categories separately, which in many instances is double the cost of our entire service. With us, you get all this and more.
In each instance, we can fine tune the selection process by utilising the trend indicator and several of our other top rated tools. For more information on the tools we use click here. Leave the market analysis to us, and spend time doing things that bring joy to your heart, instead of wasting it on things that might heighten your fear. As market direction is no longer an issue, you can sit back and enjoy the ride.
The Trend Indicator in action.
Let us look at some real time examples of the trend indicator in action. The red arrows in the charts are profit points for traders with short to medium trading time frames. We generally focus on the long and very long term timelines, but will always provide suggested exists for traders with shorter horizons. Concentrating on the long-term timelines does not mean we always hold a position for an extended period of time; in fact we generally tend to hold onto positions for less than 6 months. We use long-term time lines to base our entry and exit points on; in other words the analysis is based on applying the trend indicator to weekly and monthly charts. Blue arrows indicate buy signals based on the trend indicator and red arrows indicate sell signals based on the trend indicator. As you will see from the numerous examples we have provided below, we are not looking to spot the ultimate bottom or top. In most cases, the signal turned bullish before a bottom was in place and bearish before a top was in place. There is a saying in Wall Street that bears win sometimes and Bulls win sometimes but pigs always get slaughtered. The point we are trying to make here is that our goal is not to spot tops or bottoms or fixate on trend lines and worry about when the stock might or might not top or bottom. Our goal is to enjoy the ride up and or down until the signal changes and that is it. With this strategy in place, it makes investing an extremely pleasurable venture.
We will start off with FXI (iShares FTSE/Xinhua China 25 Index), one of the much larger ETFs. Even with this large ETF, you can see the how beautifully and seamlessly the trend indicator works.
If you were following the principles of trend line investing you would have waited for SOHU to break out above the black downtrend line (breakout point indicated by the green arrow). However, the trend indicator turned bullish almost three years earlier and along the way generated additional buy signals, as shown by the blue arrows. The trend indicator allows you to lock in significantly larger profits, while at the same time focussing on the real trend at hand, as opposed to trading based on news or wrong perceptions.
You would have been able to open a position in 2011 at around 32 as opposed to waiting till 2014 to get in at around 39.00-40.00. Additionally, you would have been able to add to your position along the way as indicated by the additional blue arrows. Short-term traders would have been able to bank profits as noted by the Red Arrows and re-open new positions based on the blue arrows. Note that almost on every occasion we neither managed to get in at the exact bottom or out at the exact top. This never was and never will be our strategy. We are looking at an ETF; that is very large and where the gains are somewhat muted. If you had opened positions in strong stocks such as CHL, NTES, SOHU, etc., the gains would be significantly larger. Let’s take a look at SOHU and NTES
You would have been able to open your first position in SOHU back in early 2012 and continuously add to it till 2015; along the way you would have taken profits as indicated by the red arrows. If you were following trend line investments protocols, you would still be waiting to get in. Notice again, we almost never managed to get in at the bottom or out towards the top; that is not the goal here. Our goal is to get in when the markets are issuing bottoming signals and get out when they are generating signs of a top. We never attempt to time the exact top. If we do happen to time the exact top, we assign that to lady luck.
The first buy signal for the stock NTES was generated in late 2011, and you would have got in and out continuously till 2015; along the way you would have profits as indicated by the red arrows. Again, we almost never got out towards the top or in towards the bottom, and that is perfectly okay with us.
With Vimpel Communications (VIP), the first buy signal was triggered in Nov 2014 followed by a second and much stronger buy signal in Feb 2015. Shortly after that the stock took off, and we bailed out around 6.30; while we managed to get out close to the top, this was more luck than planning. Our goal is to get when the market starts to give indications of a top, and this usually means we get in a bit early and out a bit early, but we are not to worried about catching a few extra points. Our goal is to get in before the market takes off and out before it breaks down.
The trend indicator is also great for picking topping action. FXE, which is a proxy for the Euro, generated sell signals in August of 2011 and has continued to produce them until the present day. In between we only had to buy signals as indicated by the blue arrows. Future’s traders, equity players and options players had many opportunities to short this market and walk away with massive profits. The same calls were made for Gold and the dollar. In fact, in 2011, we turned bullish on the dollar, bearish on the Euro and bearish on Gold. Our subscribers closed their positions in Silver bullion (profits more than 1000%), Gold Bullion (700% plus) and Palladium bullion (roughly 800%).
With the trend indicator, you would not have missed the biggest and most hated bull in financial history. Again, the indicator never managed to pick the exact bottom and or top. There was quite a bit of volatility especially after the first position was established in 2009, but this indicator focuses on the long term picture, so acid is only experienced over short term time frames and when you get used to the way this indicator operates, you stop worrying about short-term movements. Instead, if the market does dip lower after a buy signal is triggered, our mantra is to buy even more the lower the market or stock drops. The investing strategy is very simple and effective.
Looking for more, take a look at the extensive list of our Market calls.
The Most Powerful Tool In Technical Analysis