Anyone been looking at the HSI/HHI spread. been doing some f'in funny stuff last few weeks. HHI trending, HSI range bound
working hard do constructive things and building a future. happy with the mrs. happy with life. not even thinking about trading and the screens.
Anyone been looking at the HSI/HHI spread. been doing some f'in funny stuff last few weeks. HHI trending, HSI range bound
Here's the spread, the last three months including the ATR(14) which has clearly increased as the HHI has outperformed the HSI. Why is that anyway...Why would the HSI underperform when its only partially weighted with HHI components? Is that due to a general route of emerging market assets as well as China?
Shouldn't you plot the ratio rather than the spread?
HSI trades at around 21000, HHI at ~9000. Spread = 12000, ratio HSI/HHI = 2.333.
Both falls 10%. HSI = 18900, HHI = 8100. Spread = 10800, ratio HSI/HHI = 2.333.
So the spread changes from 12000 to 10800 while both indices simply moved by the same percentage wise... and just because the spread has reduced doesn't mean HSI has underperformed.
I can only plot the price difference. Maybe TH can plot the ratio with his proprietary trading tools, but Ninja is quite limited unless you can code.
Anyway... we have the making of a massive black Monday imo. And it'd be time to buy probably looking for a highly close by Friday.
Don't worry about the plot. Think about the maths and whether it makes sense. It's pretty important when you are trading spread directionally to understand what you are actually trading.
A quick glance shows that HSI has gone from a recent high of 23000 to 21500 (6.5%), while HHI has gone from ~10000 to 9230 (7.7%). So the HHI has indeed underperformed, contrary to the observation you've made based on the spread.
Over the same period, the spread has gone from 13000 to 12300. If you long the spread thinking China should fall more than HK, you'd be trading the wrong direction.
Anyway... we have the making of a massive black Monday imo. And it'd be time to buy probably looking for a highly close by Friday.
Don't worry about the plot. Think about the maths and whether it makes sense. It's pretty important when you are trading spread directionally to understand what you are actually trading.
A quick glance shows that HSI has gone from a recent high of 23000 to 21500 (6.5%), while HHI has gone from ~10000 to 9230 (7.7%). So the HHI has indeed underperformed, contrary to the observation you've made based on the spread.
March 14 (Bloomberg) -- Record amounts of borrowing to buy U.S. stocks may be a forerunner of higher prices if the past is prologue, according to Bespoke Investment Group LLC.
The CHART OF THE DAY shows how the Standard & Poor’s 500 Index fared after total margin debt at New York Stock Exchange member firms set records for five straight months, according to data compiled by Bespoke and Bloomberg. The period matches the length of the current streak, which started in September.
There were 11 instances between 1963 and 2000 when records occurred five months in a row or more, based on Bespoke’s data. In all but one case, the S&P 500 was higher three months after the fifth record. The exception occurred in the first quarter of 1994, when the index dropped 4.4 percent. The S&P 500 also had gains most of the time after six months and one year, as the chart illustrates.
“We wouldn’t go so far as to say that record margin-debt levels are a buying signal,” the Harrison, New York-based firm wrote yesterday in a report. Even so, history shows they “have not been a very good sell signal either.” About 25 percent of monthly totals since 1980 have been records, the report said.
The track record contrasts with concern expressed by Richard Fisher, the president of the Federal Reserve Bank of Dallas, and others that record borrowing may set the stage for stocks to fall.
Margin debt is among indicators that are worth watching “very carefully so as to ensure that the ghost of ‘irrational exuberance’ does not haunt us again,” Fisher said in a March 5 speech in Mexico City. He was referring to a phrase used by the Fed’s former chairman, Alan Greenspan, in 1996 about the effect of investor sentiment on stock values.
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Sincerely,
David Wilson
Chart of the Day, Bloomberg News
Stocks Editor, Bloomberg Radio
Author, Visual Guide to Financial Markets
http://www.wiley.com/buy/1118204239
Markets trading kind of flicky this morning. Haven't really moved anywhere but have moved a lot and quickly, if that makes sense.
Not quite sure what to expect today, hopefully something happens cause I need to make up for my crap morning so far.
YeahAnyone have an idea what Mr Bot is up to on the Seng today..... F'in all over the place!! Up- Down-Up back down.... think he has a loose capacitor....
Looks like smash down day..... lots of vol.... if she sticks it will be a stinker..... hang on.
:shoot:
lol....then straight back the other way 100 points
Funny old day... good volume but we seem to be going nowhere after all that.
I'm trying not to be a scalper but I've had 10 trades and half of them have been 3 tick winners( because they were scratched!)
Though cannot complain only 1 loser.
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