If so, then this article is clearly meant for you.
Here is a quick and easy way to time the markets accurately even for amateurs.
Every year there is so much improvement in technology that robots have become better than humans in doing many things. When it comes to the financial markets, computer buy and sell signals work better than humans not because they are more accurate but because they are able to calculate things faster and take the emotion out of trading.
Don't get me wrong...
You still need to make the ultimate decisions on your own. Technology is here to guide you and help you. They help to make your trading easier. A seasoned trader will of course make better decisions than a computer but for the amateur, this is a great blessing.
The first thing that you need to do is to head over to www.investing.com.
Don't worry, this website is free. You can also download their app in Google Play Store or Apple Store.
At the top of the page, you can search for stocks or index or just about any financial instrument. For demonstration purposes, I will input the Dow Futures into the search box.
When you input the Dow Futures, it will bring out Dow Jones Industrial Average Futures' page. Scroll down and you will see the technical summary for Dow.
As you can see, investing.com gives you the technical summary of Dow which includes the Monthly, Daily, Hourly, 15 Min and 5 min signal for Dow. If you want more technical summary for more timeframes, click on the Technical Summary link to see more options.
There are 2 types of technical summary.
The moving averages which capture the trends using moving averages and technical indicators which capture their technical signals. I do not know what are their settings but I suppose they use their own in house settings. It does not really matter whether we know the exact construction or not.
As long as they work, we don't really need to be bothered by that. Just like you know that if you press the pedal in your car, it will make it move forward. But you don't really know how the mechanics work.
By the way, you can also access these technical summary using your cellphone.
Just download investing.com's app and you are ready to go.
The technical signals work very well to help you time the markets.
I have found them to be quite reliable. Not 100% success rate but they help to keep you on the right side of the market most of the time for your selected time frame.
They combine the moving averages signals with the technicals to give you a summary.
From the screen shots of Dow Futures' technical signals above, you can see that:
*I have gone and find the summary for the weekly timeframe for you as well in the Technical Summary.
The information above is worth its weight in gold for those who follow the US Stock Market. It is also very useful for people who trade the Dow Jones Futures or any of its 30 components.
Let me just give you a brief explanation of what the above information means...
This is a wealth of information for you.
How you make use of the information will depend on what type of trading you do. If you are a long term investor, this signal tells you to stay put. if you are a short term trader, this signal told you to sell.
Let's take a look at some charts of the Dow Jones Industrial Average to see whether these signals are reliable or not.
Remember that the monthly and weekly signals gave us a strong buy signal?
The charts below are the monthly and weekly charts of the Dow. The left one is the monthly chart and the one on the right is the weekly chart.
As you can see, the Dow is in a monthly uptrend and a weekly uptrend. Therefore, any sell off or corrections or even crashes are always buying opportunities for long term investors like Warren Buffett.
They like to buy solid companies at a cheaper price because when the long term trend is up, these stocks will eventually go back higher. Corrections and crashes create temporary inefficiency in the pricing of stocks. Thus the value investor and long term investor will buy them cheaper before the markets realize the true potential of those stocks.
So is the buy signal given by Investing.com's technical summary correct for the monthly and weekly timeframe?
Based on what the charts are telling us, the buy signal is correct.
Investing.com's signal for the daily timeframe is sell at the moment.
The mid term lasts for a few weeks to a few months. If the index is in a strong uptrend, the sell signal for the daily timeframe may last shorter as the index may find some support at rising moving averages or price support.
The chart above is the daily chart of the Dow Jones.
So far, the sell signal in the daily timeframe is correct. It is telling us that it is dangerous to buy stocks as the stock is correcting. When we look at the daily chart of Dow, we can see that it is indeed falling.
But do you remember the strong buy signal for Dow in the monthly and weekly charts?
What the signal is telling us is the Dow is in a mid term weakness in long term strength. Which is why the financial newspapers are always telling people to buy on dips in an uptrend.
There is indeed some technical areas which investors and traders can buy stocks cheaper. First of all, a correction to the daily 50 MA can be a great area to buy stocks. Stocks often correct and rebound when they touch the 50 MA. Secondly, there are price support areas below.
The first price support area is 24600 to 24900. The second one is 23150 to 23550. Please remember that price support are areas and not fixed prices.
While we know there are technical areas of support, we do not know when and where the Dow might stop dropping. Therefore, the sell signal in the daily timeframe given by Investing.com is correct so far.
In order to have more accuracy and a more precise market timing, we will have to switch to the 60 min timeframe. The hourly or 60 min timeframe is very useful for short term traders to time the market.
It is also very useful for investors to detect when the market is about to turn in the daily time frame. For example, if an investor sees that the Dow is falling to a support area in the daily charts, they can switch to the 60 min timeframe to try and find a reversal pattern.
You do need some skills to do that if you are analyzing the charts yourself. Thankfully, amateurs and newbies can refer to Investing.com's technical signals to do that.
The chart above shows the daily chart of Dow on the left and the hourly chart of Dow on the right.
Both the daily and hourly signals given by Investing.com says its in a sell signal. As you can see, the trend in the hourly chart is still down and therefore one should still be bearish on Dow till the hourly signal changes from sell to buy.
Now, that does not mean you should straight away buy stocks when the 60 min signals changes from sell to buy. It just means that if you attempt to long Dow Jones right now, it would be very risky.
To enter a trade, you always need to have a trading strategy. The signals are just there to give you confidence and confirmation.
Those who wish to day trade the index or stocks should look at the 15 min and 5 min signals for the Dow Jones. If the signal is a sell signal or a strong sell signal, then you really need to be careful of buying stocks. On the other hand, you could consider shorting the market when there is a sell signal.
The charts above shows the 15 min chart of the Dow on the left and the 5 min chart of the Dow on the right.
If you remembered, Investing.com gave strong sell signal in the 15 min time frame and a sell signal in the 5 min time frame. I have put the signals below again so that you can easily see it.
Every thing from the daily time frame and below is so bearish. That is why it is important to stand aside now or learn to short the markets.
For day traders, when the 15 min and 5 min are so negative, this is the best time to short stocks. Those who only long stocks should just stand aside.
Do you agree now that Investing.com's technical summary is useful?
For those who have lots of experienced or have your own buy/sell signals, you might not need this. But for the majority of people who are not technical savvy, you should consult these signals each time before you buy or sell a stock/index/financial instruments.
Let me show you a few examples of how well Investing.com's signal works in stocks.
For example, you might be considering to buy Apple for a short term trade. So you pull out the technical summary for Apple and this is what you see...
The signals for the hourly, 15 mins and 5 mins timeframe are all strong sell. Therefore, you should not buy Apple for a long trade in the short term yet. Be patient and wait for the signals to change.
Just to recap, let me show you which time frame you should consider when looking at the technical summary.
One of the fantastic things I have realized about Investing.com is that they have almost all stocks, indexes, commodities and financial instruments in the world. I realized this when I started analyzing Malaysian stocks for my local friends. I get all my charts from Investing.com.
Some charts run a bit because Malaysian stocks pay dividends and Investing.com has not readjusted to that fact. But for most of the time (99%) the Malaysian stock charts do not have problems.
Let's say you are interested to know the technical health of Hengyuan Refining in Malaysia. Hengyuan is one of the most popular stock in Malaysia at the moment. So what you do is bring out the technical summary of Hengyuan.
As you can see from the screenshot above, there is still a strong sell signal in the daily, hourly and 15 min timeframe. There is a strong buy signal for the monthly time frame. I have also gone and check out the weekly signal for you. It is a buy signal.
So, what this means is Hengyuan is healthy in the long term but it is still dicey to buy in the shorter term. It takes some practice to decipher what these technical summary really means but when you combine it with charts, you will be able to make more sense of what is happening.
As you can see from the weekly and daily charts of Hengyuan above, the stock is still in a long term uptrend. The daily charts show that the stock is still in the process of finding a bottom. There is no buy signal yet in the daily chart.
I find all these to be quite reliable as I manually do analysis on Hengyuan for my friends and readers. The technical summary may not give you a trading setup kind of buy or sell signal but at least they tell you whether you are in the correct trend of the stock or not.
If you can find that financial instrument in Investing.com, you can find their technical summary. Are you interested in:
Just about anything you can think of you can usually find it on Investing.com.
You now have a very simple but powerful weapon in your ever growing range of trading/investing arsenal. I have been looking at their technical summary for quite some time now and I realize that they are quite reliable.
No they do not give you trading setups but if you follow the technical summary you will be on the right side of the market most of the time.
Hope this helps,
Happy trading and investing!
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