# Analysis wanted...



## Trembling Hand (1 February 2013)

Ok fellow punters as much analysis as you want. If this was a stock what do you think? Is it bullish? Bearish? Indifferent to its future?

Can you see a trading opportunity given a certain move? What would invalidate that trade?

Does it look like any stock or instrument that you recognise?

Here is the charts, 

Daily



Weekly



Monthly


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## sammy84 (1 February 2013)

It's some instrument tracking the XAO.

It goes against instinct/gut to enter at an area which one would perceive it to be over bought, but that doesn't necessarily mean that's right. No obvious signs of weakness so far so it should continue higher with the momentum it currently has. 

I'm long but will exit quickly around resistance on any sign of a pullback 

Given the impulsiveness of this move any pull back should be short lived and that would be a good time to load up again.


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## Trembling Hand (1 February 2013)

Nice work Sammy, I'll let it run a few days and hopefully get some more input before I reveal the secret instrument.


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## CanOz (1 February 2013)

I think its the continuous SPI contract including ETH. Its bullish, but pulling back. An opportunity may present at 4800 to enter long again.

CanOz


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## Trembling Hand (1 February 2013)

CanOz said:


> I think its the continuous SPI contract including ETH. Its bullish, but pulling back. An opportunity may present at 4800 to enter long again.
> 
> CanOz




Can what is in ya green tea?  Its only at 2225?


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## tech/a (1 February 2013)

SPI


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## CanOz (1 February 2013)

Trembling Hand said:


> Can what is in ya green tea?  Its only at 2225?




Ahh, had to squint to see that lol...must be getting old.

I'll find out...gimme a minute...

CanOz


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## Trembling Hand (1 February 2013)

tech/a said:


> SPI




I tell you this much - nope.

What do you think? Especially given the point on the monthly?


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## tech/a (1 February 2013)

Something sus about those candles


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## kid hustlr (1 February 2013)

I'm gonna guess the ETF tracker divided by 2 as the instrument. STW I think it is. It was 40 odd a few months back from memory so the numbers fit pretty well if you halved it for some reason.

I still think buy side strong side for now but there looks to be some strong resistance on the monthly.

Agree with most that I'd be looking to enter long on a pullback


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## prawn_86 (1 February 2013)

kid hustlr said:


> Agree with most that I'd be looking to enter long on a pullback




Ditto. Or a confirmed break above '2300'


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## IFocus (1 February 2013)

tech/a said:


> Something sus about those candles





Seen them before, getting old cannot remember where some sort of range bars?


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## skyQuake (1 February 2013)

Holy crap look at the tails on that thing. Some kind of a intra-fader's wet dream. It doesnt have a staggered opened so it doesnt seem like an Au or asian or Uk index, but volume suggests it is some kind of index 

As for analysis:

She'll be right
Go buy it and ride that trend!

Besides, any sort of selloff will take a while to consolidate before that bullish move can roll over.

Edit: Can't be the SPI, Jan 11 didnt push pash Jan 10


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## explod (1 February 2013)

Hindsight is the go (LOL) of course but,

On the monthly 2100 was a break on which to take a position.  If it can go to 2400 we could add to it.  However there is resistance in between this area so needs to be watched.  

A new high area would be another add on but the 3000 area the one to be ready to run (ie get out).  It is interesting that when something reaches for a new goal the round numbers are like a magnet but the real money will drop it just below.

But a hold on original buy in ATM.


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## CanOz (1 February 2013)

IFocus said:


> Seen them before, getting old cannot remember where some sort of range bars?




Yeah, you guys are thinking they're Heiken Ashi bars....They look like that on the weekly and monthly, but the daily must be created from an instrument that trades Extended Trading Hours.



CanOz


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## tech/a (1 February 2013)

Ok
I reckon its a candlestick chart of some sort of volume traded at a price for the XJO.
Futures related some how.


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## Gringotts Bank (1 February 2013)

CanOz said:


> Yeah, you guys are thinking they're Heiken Ashi bars....
> 
> CanOz




I call them Heineken Asahi.  

A little stock market humour on a Friday night.

I could go an Asahi right now.


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## Plan B (1 February 2013)

Something along the lines of the HSI index?? Matches somewhat....


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## skyQuake (1 February 2013)

tech/a said:


> Ok
> I reckon its a candlestick chart of some sort of volume traded at a price for the XJO.
> Futures related some how.




tech, have a look at the monthly, Jan 11 pushed past Jan 10 (which it didnt), so it can't be the SPI

Monthly looks like Taiwan, but not short term.

I do think price has been edited somehow


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## So_Cynical (1 February 2013)

I have no idea what it is, but i know i would be buying it in June and July and want to be selling now...probebly would of already sold.


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## CanOz (1 February 2013)

Gringotts Bank said:


> I call them Heineken Asahi.
> 
> A little stock market humour on a Friday night.
> 
> I could go an* Asahi *right now.




hmmm, with sashimi


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## CanOz (1 February 2013)

Trembling Hand said:


> Ok fellow punters as much analysis as you want. If this was a stock what do you think? Is it bullish? Bearish? Indifferent to its future?
> 
> Can you see a trading opportunity given a certain move? What would invalidate that trade?
> 
> ...




Here is the SPI daily, with HA candles...


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## jmg86 (1 February 2013)

First post here on ASF.

Looking at these charts, looks like something to do with the overnight Gaps in the SPI? Some sort of cumulative buy the close sell open?  eg. there's big ranges on the charts when we have large overnight gaps in the SPI and tight ranges when it has no offshore lead like we had early last week, the breakout above 2200 in the chart is when we had the gap after Australian day?


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## Trembling Hand (4 February 2013)

Ok just to add to the fun before I reveal the mystery instrument I'll tell you its 'something' from the ASX market and this is it compared to the XAO (Blue line),

Long term comparison,



From this you can see the XAO from the end of 2007 to the start of 2009 fell harder. And has lagged behind since those lows.

Medium term (weekly),


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## Gringotts Bank (4 February 2013)

When does the fun start?  :jump:

How can such a chart - which is almost identical to the XAO - be of use in trading?  I could just look at the XAO itself, surely?


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## tech/a (4 February 2013)

Advancing stock from Declining stock.
Some how charted in Candlestick format.



> which is almost identical to the XAO - be of use in trading?




Well because it ISNT.


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## KurwaJegoMac (4 February 2013)

Trembling Hand said:


> Ok just to add to the fun before I reveal the mystery instrument I'll tell you its 'something' from the ASX market and this is it compared to the XAO (Blue line),
> 
> Long term comparison,
> View attachment 50810
> ...




I would be going long, stop aroud 2070.

My guess is that it's some sort of sector index? Seems too close to the XAO to not be some sort of derivative. Perhaps Financials or top 50/100?


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## KurwaJegoMac (4 February 2013)

Food for thought:

What would be a leading indicator prior to GFC and a lagging indicator afterwards? Or put another way, what would be valued higher prior to GFC and valued lower afterwards?

Property? Maybe an REIT/RE Index?

Am I getting warmer?

Damn you for putting this up it's going to play on my mind all day :/

EDIT: Can't be property - we didn't have that large a fall I in 08 I would have thought


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## onthesword (4 February 2013)

Probably small ords


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## CanOz (4 February 2013)

I went over every index in my premium data collection and found nothing at that level. I'm guessing its a custom index that's made up from a derivative of the main index.

CanOz


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## cynic (4 February 2013)

Charts have never appealed to me, but if I had to guess, I would say the XSO represented in USD.


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## Trembling Hand (4 February 2013)

onthesword said:


> Probably small ords




Here is the comparison to the Small ordinaries,






Gringotts Bank said:


> How can such a chart - which is almost identical to the XAO - be of use in trading?  I could just look at the XAO itself, surely?




Well that is the point of this thread. From recent posts some are, IMO, looking at the market with the depth of 2 min worth of newbie's analysis. There is a unique flaw in Aussie indexes, in fact most Asian indexes, that to me makes looking at the XAO chart and making portfolio decision F'in silly. And I'm not even a systems trader. 

Back latter....


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## CanOz (4 February 2013)

Ooooh, interesting....the plot thickens.


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## Gringotts Bank (4 February 2013)

Big build up.  Is this necessary?!

::::tumbleweed rolls by:::::::


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## Trembling Hand (4 February 2013)

Gringotts Bank said:


> Big build up.  Is this necessary?!
> 
> ::::tumbleweed rolls by:::::::




sorry dude can you just post a pick of the XAO with an RSI and some random lines then we can be done with this. We all know how good your calls have been with those tools..........


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## Gringotts Bank (4 February 2013)

It's like a Hollywood production!!  :

If you have something useful to say, why not just say it?


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## Trembling Hand (4 February 2013)

Gringotts Bank said:


> If you have something useful to say, why not just say it?




Yeah sorry I work slow, But hey least I get it right, I'd prefer that than posting your stuff thats continually proven "dis-proved"!


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## CanOz (4 February 2013)

Trembling Hand said:


> Yeah sorry I work slow, But hey least I get it right, I'd prefer that than posting your stuff thats continually proven "dis-proved"!




OK you two, that's enough:frown:....

the suspense is killing me.

CanOz


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## KurwaJegoMac (4 February 2013)

Is it the XAO, taken at some point in time (e.g. 2007) that retains all the original stocks at that point in time until now? That is to say, it wouldn't include any stocks added or removed since that snapshot was taken?

Edit: would that make sense though? Given the positive bias of the index (via removal of the laggards) you'd expect the chart to be trending below the XAO?


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## KurwaJegoMac (4 February 2013)

CanOz said:


> OK you two, that's enough:frown:....
> 
> the suspense is killing me.
> 
> CanOz




Cmon CanOz get stuck into it! I reckon you can crack this one


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## Gringotts Bank (4 February 2013)

Is it a composite of managed fund unit prices?


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## systematic (4 February 2013)

EWI (Equal Weight Index)?
Suspense is cool.


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## CanOz (4 February 2013)

Yeah, i'm thinking it must have something to do with the way the index is weighted. He has made a change to it somehow to reflect the way that perhaps the US indices are weighted, or re-weighted.

CanOz


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## skyQuake (4 February 2013)

As long as it doesnt end like



			
				Trembling Hand said:
			
		

> Surprise guys! Its a random number generator that looks a lot like the XAO


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## CanOz (4 February 2013)

Could it be he has changed the way the index is calculated to a price weighted index instead of a capital weighted index?

CanOz


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## Trembling Hand (4 February 2013)

KurwaJegoMac said:


> Is it the XAO, taken at some point in time (e.g. 2007) that retains all the original stocks at that point in time until now? That is to say, it wouldn't include any stocks added or removed since that snapshot was taken?
> 
> Edit: would that make sense though? Given the positive bias of the index (via removal of the laggards) you'd expect the chart to be trending below the XAO?




Very close. 

Here is a few quick pics,







Ok I've run out of time again but I'll put you all out of your misery and come back tomorrow and add more.

The original Instrument, XAO_NOW, is a price sum index of the current XAO. So thats equal weight. All prices summed to get the index OHLC (thats why the daily bars are little funky), using the CURRENT XAO constituents. My main point being the current XAO has little to do with the XAO of 2005 to 2007. From my records there is nearly 160 different companies in the current XAO. Its not different on a cap weighted bases because the top stocks hardly ever change but its a completely different market from 06.

The red line is the XAO calculated the same way as the first, that is equal weight price summed, adjusted at 2007, 2008, and 2009 as per the additions and exclusions of the XAO. Few points to make but the main one being have a look at how far off all time highs we are with the XAO_NOW and how far we have come from the 2009 lows.

Come on bears. ASX is healthy.


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## kid hustlr (5 February 2013)

Trembling Hand said:


> There is a unique flaw in Aussie indexes, in fact most Asian indexes, that to me makes looking at the XAO chart and making portfolio decision F'in silly. And I'm not even a systems trader.




The S&P500 also re balances every quarter, why is this flaw only unique to Aussie Indexes?


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## tech/a (5 February 2013)

You make a very good point and one Ive not considered directly.
If using an index filter for systems trading it could have an effect on
either pausing or completely stopping a system from trading.

It could also switch buying on at different levels.
How much it affected individual systems would need to be tested.
I dont know that it would be all that different.


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## Trembling Hand (5 February 2013)

kid hustlr said:


> The S&P500 also re balances every quarter, why is this flaw only unique to Aussie Indexes?




Our market is top heavy unlike US/Europe. Once you get outside the to 10-20 market cap slips very fast.


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## Gringotts Bank (5 February 2013)

How do you use this to make trading more profitable?  How is this better than using the XAO?


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## Trembling Hand (5 February 2013)

Gringotts Bank said:


> How do you use this to make trading more profitable?  How is this better than using the XAO?




Thats my point. Should you be using the XAO to figure out the strength or weakness of the market? 

Who said that looking at the XAO IS a good idea? What edge does looking at a top weighted continually changing index have to do with trading an individual stock or a group of stocks not represented by the weighting of the XAO?

Why would you look at an index level 3 years ago that has nothing to do with the current collection of stocks. Let alone one 5 or more years ago? When/if we take out an important level what does that mean? Was it really resistance/support/High/Low when 25% of the stocks that set it don't trade any more!!??

Why look at the XAO with lines all over it when the only thing that moves it is practically 4 banks, 4 miners, a telco, and a few retailers - stocks that you'll probably never trade. Meanwhile you have hundreds of stocks moving along nicely that will never nudge the XAO either way.


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## Gringotts Bank (5 February 2013)

Trembling Hand said:


> Thats my point. Should you be using the XAO to figure out the strength or weakness of the market?
> 
> Who said that looking at the XAO IS a good idea? What edge does looking at a top weighted continually changing index have to do with trading an individual stock or a group of stocks not represented by the weighting of the XAO?
> 
> ...




Because on average, 70% of smaller stocks will follow the lead of the bigger companies that constitute the XAO.  Not many small co.s will go against the trend set by the big co's.


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## Trembling Hand (5 February 2013)

Gringotts Bank said:


> Because on average, 70% of smaller stocks will follow the lead of the bigger companies that constitute the XAO.  Not many small co.s will go against the trend set by the big co's.




Oh you are missing the point. Which is surprising, as a system trader, are you not looking for the stocks that outperform everything else.


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## sammy84 (5 February 2013)

Isn't that why we should always keep an eye on the XSO as well?


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## skc (5 February 2013)

Trembling Hand said:


> Thats my point. Should you be using the XAO to figure out the strength or weakness of the market?
> 
> Who said that looking at the XAO IS a good idea? What edge does looking at a top weighted continually changing index have to do with trading an individual stock or a group of stocks not represented by the weighting of the XAO?




Interesting comment. 

Most traders sort of understand that context is important when it comes to trading shares. The performance of different technical analyses varies depending on the market context... and many traders go to the index chart to seek context, rightly or wrongly. 

IMO, the better approach is to adopt a sector-view. Looking for a long entry at David Jones? Take a look at what the discretionary retail sector is doing. Get confirmation there rather than from XAO that really doesn't mean a great deal due to its methodology.


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## Trembling Hand (5 February 2013)

sammy84 said:


> Isn't that why we should always keep an eye on the XSO as well?




Mmmmm. I wouldn't be happy with that. What you have there is stocks from 101 to 300 out of the 500 or so XAO. Its basically the middle of the XAO but its still a jumble of stuff that comes and goes and is still cap-weighted.


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## Gringotts Bank (5 February 2013)

Trembling Hand said:


> Oh you are missing the point. Which is surprising, as a system trader, are you not looking for the stocks that outperform everything else.




Normally I let the individual stock tell me when to sell.  But if I get up one morning and the DJI closed down2%, then I know th XAO is very likely going to be at least -1%, and that means that 70% of the stocks in my portfolio will come off maybe -5%.  I overrule my system a lot.

You keep referring back to what I said about the XAO being overbought.  Since then it's put on 100 points.  So it was a bad call.... so what?


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## peter2 (5 February 2013)

Interesting discussion TH. 
No doubt the index with the weakest fundamentals is the DOW. It's importance is due to the fact that all the commentators report it. DOW down 129pts drives sentiment. I like to look at various sector indicies also but in the ASX these are dominated by one or a few stocks which makes them of limited value.

Perhaps we should make up our own indicies that better reflect the type of stocks we trade. It would provide a better benchmark than a general index. Making indicies and charts is very tedious work without the right software. This makes me use the XAO as my default benchmark. For better or worse as you (TH) have rightly questioned.


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## Trembling Hand (5 February 2013)

Gringotts Bank said:


> Normally I let the individual stock tell me when to sell.  But if I get up one morning and the DJI closed down2%, then I know th XAO is very likely going to be at least -1%, and that means that 70% of the stocks in my portfolio will come off maybe -5%.  I overrule my system a lot.




Maybe - maybe not. You would think if your system is *more *right than wrong your holdings should be in the 30%. Therefore stuff what the DOW and The XAO did.



Gringotts Bank said:


> You keep referring back to what I said about the XAO being overbought.  Since then it's put on 100 points.  So it was a bad call.... so what?




Nah I don't think I have mentioned that today. And only poked you yesterday cuz you were being a nut. :


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## sammy84 (5 February 2013)

Trembling Hand said:


> Mmmmm. I wouldn't be happy with that. What you have there is stocks from 101 to 300 out of the 500 or so XAO. Its basically the middle of the XAO but its still a jumble of stuff that comes and goes and is still cap-weighted.




Makes sense. So then we have to also use the XMD -the mid cap 50 index. All very interesting. Basically we can't use one index as an overall filter.


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## tech/a (5 February 2013)

> Oh you are missing the point. Which is surprising, as a system trader, are you not looking for the *stocks that outperform everything else.*




Actually no.
Id have thought that more discretionary.



> Perhaps we should make up our own indicies that better reflect the type of stocks we trade




Did some work on this quite a while ago.
There are many variations that can be considered.
If you have a constantly changing stocks in your
portfolio you can make up an index of those stocks adding and subtracting from it.
You then have two plots.
(1) Equity curve 
(2) Your index.

We tracked this idea for a while with T/T (off of the boards)
Then you can make an index from a universe of stocks you may wish to look for signals in.
This of course is endless.
Stocks $1-$5 trading over $500K a day and above their 150Ema for instance.
If thats your universe your looking for signals from you can plot a custom index.

You want your index to be out performing the univese index.

Must get a few months to look into that again.


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## sinner (5 February 2013)

sammy84 said:


> Basically we can't use one index as an overall filter.




Depends what you're up to now, doesn't it? I would be careful in reducing this discussoin to what you've said.

TH is simply asking the question of "why" (correct me if I'm wrong), to get a discussion going, rather than saying "don't ever use the XAO for anything".

It's important to recognise what the XAO is versus the XJO, or NYCOMP versus SP500 for example. They represent the equity curve of an investment profile. If you are buying the composite, generally you're buying smaller sized companies and in holding the index you "reward" losers (by investing more) while "punishing" winners (by taking profits). 

Buying the top weighted index is a natural way to reward winners and punish losers and generally buy bigger sized companies. Size also happens to be a good proxy for information, in the information theory sense of the word.

I would also point out that statistically if a index has an up day then something in excess of 70% of component stocks will also finish the day up. Think of it like reverse breadth, it's definitely useful.



> Perhaps we should make up our own indicies that better reflect the type of stocks we trade




Check out the Livermore Active Issues http://cssanalytics.wordpress.com/2009/11/25/the-livermore-active-issues-index-using-the-nasdaq-100/

pretty easy to build an index like that.


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## Trembling Hand (5 February 2013)

tech/a said:


> Actually no.
> Id have thought that more discretionary.




How come Tech?


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## kid hustlr (9 February 2013)

Had a re-read of this. Good thread.

@ Sinner:

I like how you put it that we are 'rewarding winners' by buying the index. It's like following a momentum/trend following strategy.

When comparing the XJO vs the XAO, I note that over the last year the 'gap' between the XJO and XAO has shrunk. The XJO is outperforming. This tells me the top 200 companies have outperformed when compared to the wider top 500 index that is the XAO. I also note this is on a cap weighted basis.

@ TH

I understand what you are getting at in regards to the XAO being completely different now than it was 4 years ago, but isn't that difference in performance you've shown between the XAO2007 and 'XAO NOW' to be expected?  The 'XAO NOW' is effectively a cherry picked version of the 2009 index. Keeping the winners and dumping the losers?

For example if I was to compare the 2012 performance of the XAO constituents on the 1st Jan 2012 and the XAO constituents on the 1st Jan 2013, the 2103 XAO will always outperform as the winners are kept and the duds dropped from the index.

Still ridiculous to think on a price sum basis we are at the 2007 highs when the XAO has us 1500 points away.


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## IFocus (9 February 2013)

In the 90's I think it was News Corp that moved or influenced the main index against the general market trend due to its weighting. At the time most punters were not aware of the issue.
If you are discretionary trading forever flicking through charts of the ASX you see which areas are moving anyway.

From a fundamental point the big caps will have a impact on the market general if they are increasing profits (if this is reflected in share pricing) as the small companies that connect to the business inputs / outputs will rise with them. This certainly applies to mining /  banking.


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## tech/a (9 February 2013)

Trembling Hand said:


> How come Tech?




In direct response to this statement



> Oh you are missing the point. Which is surprising, as a system trader, are you not looking for the stocks that outperform everything else.




I said 



> Actually no




To me *Systems trading* is creating a set of *Conditions* with a set of* Parameters* and applying them to an individual instrument or a portfolio of instruments on a repetitive basis with the intention of replicating a return within the returns found during testing.
Whether stocks outperform everything else is irrelevant---Nice but not the goal.

*Discretionary trading*---mine anyway--- is using my skill as a trading practitioner to return as much as I can for as little risk as I can. This requires me to best apply my skills in selection of trade---and management of trade.
The skill set I use maybe and often is very different from trade to trade---entry to entry--stop to stop---exit to exit--time frame to time frame.I want to outperform on every trade---whether I do or not is proven by the market over any given time.


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