The chart above shows the small ordinaries index on the Aussie market. The small ords is made up of around 300 stocks but excludes the top 100 stocks (ASX100). So all the big banks and giants like BHP & RIO are taken out of the picture. All the so called blue chips are stripped out of the picture - I usually don't hold too many blue chips in a portfolio.
The chart is weekly. The top chart shows weekly movements in the Index close price. The most volatile time on the chart occured this year, with a move of -8.46%, followed by a +7.3% reversal. This must have been very challenging for short term traders and certainly woke up some long term trend followers!
The bottom chart shows 52 week ROC (adjusted). The switch from below the 0% line to above it is clearly shown back in 2003. The white horizontal line on this chart goes back 52 weeks.
The red bars on the middle chart show when one of my systems turns off. The green lines show when the system is on - colour is very useful on charts!
Now to state the obvious. We are at a potential turning point. We appear to be drifting sideways with some wild swings in either direction.
I am not going to try and predict the future from this chart because that is not the way I trade, except to say that it is pretty obvious that the market is more volatile now than it has been.
This post was inspired by Andrew's Humble Money blog and his post on The Return of Volatility.
regards
stevo
3 comments:
I think it's a fascinating time in the market. It could well be a serious turning point for global markets and it's an interesting time to be a trader :)
It's always an interesting time to be a trader!
The norm of the markets is always changing and the challenge is to find a common theme to take us through the constantly changing, yet always the same, markets.
One thing about being a trader is that the approach to money and loss changes. 15 years ago if I lost (and gained) the sums of money that I do now it would be inconceivable to me!
But then I have knowledge now that I didn't have back then.
stevo
Hi Stevo and Way,
What you are saying reminds me of what Ed Seykota once said.
"The markets are the same now as they were five or ten years ago because they keep changing-just like they did then"
Nizar.
Post a Comment