- Builds an indicator based on multiple symbols of your database.
- Displays the percentage of bullish and bearish symbols for each sector and industry.
- This indicator does not work in realtime because it requires scanning the entire database or watschlist. The file "composite update" must be run to update the composite indicators.
- Enables you to know the trend of the sector and industry hence increases your chances of a successful trade.
- The red line represents the percentage of bears in the industry, the green line the percentage of bulls in the industry and the blue line the percentage of bulls in the sector.
Above is an example of how this chart could be used.
- Potential Buy signal at point D: green lines cross above the red line, the sector indicator goes upwards, ideally also crosses the level 50 and the difference between the two industry indicators was > 70 on the bars before the cross at point C.
- Potential Sell signal at point B: red line crosses above the green line, the sector indicator goes downwards, ideally also crosses the level 50 and the difference between the two industry indicators was > 70 on the bars before the cross at point A.
The greater the difference between the two industry indicators the more accurate the signals are likely to be. At point C the difference was almost 100, this is the ideal situation to take the next cross-signal. The prefered buy condition is a cross above the level 50 because it means that there are now more bulls than bears in the market (more than 50% bulls).
Another condition would be to buy/sell when the industry indicators are at extreme levels and very close to 0/100. This simply means that probably everyone already bought/sold this industry and it could be time for a reversal. This is the time where you could use fine-tuning like scanning for hammers, engulfing patterns, Taio based signals, etc.
The ribbons on the bottom of the indicator gives additional information:
- green: Uptrend (green line > 60)
- blue: Consolidation (green line in the range between 40 and 60)
- red: Downtrend green line < 40)
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