• It’s time to escape the whiplash in your portfolio and learn to rely on the data. 
• Use Trend Seeker for short-term trends, Barchart Opinion for mid-term, and Weighted Alpha for long-term trends to avoid market whiplash.
• These indicators can help you invest with less fear and sleep better at night.    

Is Your Neck Sore from the Whip Lash? 

Chances are your portfolio experienced whiplash on Monday. The difference in the Hi/Lo range for the major indexes was unbelievable. The Dow Jones Industrial’s ($DOWI) range was 7.09%, the S&P 500 Index’s ($SPX) was 8.51% and the Nasdaq-100’s ($IUXX) was 9.07%.

The market traded Monday on headlines and tweets and not the data.  

If you’re tired of the daily roller coaster then learn to use the three Barchart indicators I use religiously:

• Trend Seeker: A short-term indicator
• Barchart Opinion: A mid-term indicator
• Weighted Alpha: A long-term indicator

Let’s look at all three and see how I use them to understand the market by using the S&P 500 Index as an example.

Barchart Technical Indicators, Explained: 

The Trend Seeker is a computerized trend analysis system, developed by Barchart.com. The system uses a combination of wave theory, market momentum, and volatility in an attempt to find a general trend for a specific market. Trend Seeker attempts to cut losers early and let winners run. 

• When there is a single dot above the price, this is a resistance point and represents a bearish trend.
• When there is a single dot below the price, this is a support point and represents a bullish trend.
• When there are two dots, one above and one below the price, this represents a neutral or hold trend (these are the entry prices to make a new buy or sell trade).
• When a trend EXITS either a bullish or bearish trend, the trend is forced as a neutral trend for at least one day.

For this example I’ll use a chart with the price, 50-day Hi/Lo Turtle Channel, the 50-Day moving average, and the Trend Seeker:

It’s plain to see that the Trend Seeker gave a “Sell” signal on Feb. 27 and since then the S&P 500 Index fell 13.64%. Look at the value you would have saved.

If you have a slightly longer time frame, you can follow the Barchart Opinion.

The Overall Average Signal is calculated from all 13 indicators. Signal Strength is a long-term measurement of the historical strength of the Signal, while Signal Direction is a short-term (3-Day) measurement of the movement of the Signal.

Barchart Opinion showing signal plus the strength and direction of each indicator:

My Chart of the Day template uses the price, 20-, 50-, 100- and 200-day moving averages plus the Trend Seeker:

You can pick which moving average or moving average cross over you want to use as your trading signal. In this example, if you used the 200-day moving average you would have sold on March 10 at 5,614.56 and since the Trend Seeker didn’t give a signal to get back in, you would have saved 10.91%

Lastly, I use the Weighted Alpha and compare it to the 52-week percentage change. Today the Weight Alpha of the S&P 500 Index was -8.82 and the 52-week percentage change was -2.73%. When the Weighted Alpha is higher than the arithmetic change, that means the momentum is accelerating. Conversely if the Weighted Alpha is less than the arithmetic percentage change, the momentum is decelerating.

The Bottom Line

Try using these three indicators in a rational manner rather than acting upon every headline or tweet and you’ll invest with less fear and get a better night’s sleep.

Additional disclosure: The Barchart Chart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance and reevaluate your stop losses at least on a weekly basis.