MTR Investors Group looks at a common set of technical and economic factors when deciding to trade long, short, or stand aside. Like a military Scout sent out to gather information, technical and economic indicators can provide valuable information to a trader or investor. In our trading we review these indicators on a daily basis and out of that daily analysis came the idea for Stock Market Scout (SMS).
Stock Market Scout uses a wide range of stocks for analysis and provides quick and easy access to key technical and economic indicators to assist in making better trading decisions.
Stock Market Scout Signals: Each Scout Signal (Green=UP, Red=DOWN, Yellow=NEUTRAL) consists of a number from 0 to 8. Zero being the lowest (bearish) and 8 being the highest (bullish).
If the market scout signal is Green (SMS >= 6 ) = Look for long trades, Red (SMS <= 2) = Look for short trades, Yellow (SMS >2 and <6) = cash.
For the purposes of portfolio tracking we will use the following criteria; A buy signal is issued when the SMS rises to 6 or more. A sell signal is issued when the SMS drops to 5 or less. The ETF will be bought or sold at the opening price on the following day's market opening price following a signal.
The SMS signals are published each day shortly after the market close. (See links page to access the MTRIG website and sign up for notification of updates).
Current Signal and History
The eight indicators that formulate the SMS score are as follows:
1. Intermediate trend: Closing price a group of stocks make up the SMS Index this is related to the intermediate 50 day trend
2. Long term trend: Closing price related to the long term 200 day trend
3. Wilder's RSI: We take a different view of RSI. Instead of the standard overbought and oversold levels we look at BUY and SELL Zones. Example: RSI greater than 51 is a Buy Zone, RSI less than 48 Sell Zone, between is hold/neutral.
4. Percentage of stocks over the 50 day moving average: When 50 to 72% of stocks are over the 50 day moving average this is typically bullish. When the level is below 50% stocks typically drift lower. When the level is above 72% it may mean the stock market is topping out and could move lower. When 30% or less of stocks are under the 50 moving average it may indicate the market is bottoming out and may move higher.
5. Percentage of stocks over the 200 day moving average: See the criteria above, the same applies here. Lean more towards paying attention to the % Stocks over the 50 Day MA.
6. PMI: The ISM PMI index is a good indicator of where the economy and market is headed.
7. MTR Economic Model: This model measures the trends of the consumer's pocketbook using real-wages. When real-wages rise the stock market typically follows.
8. Seasonal Indicator: The market, like the weather, has seasons. The market seasons can be more erratic than the weather. Therefore we apply the seasonal indicator with less weight that other measures.