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The combination of gcov5 and TCD osc = high precision & win5m chart, overall condition analysis. The combination of gcov5 and TCD osc will give more strength to a decision whether to buy or sell. In turn, it can increase accuracy and win. how to get a win in all positions? 1. refers to bull/bear trend ( TCD osc) 2. find a gcov5 signals based on SnD zone and early TCD trend 3. buy price 3 ticks below the close of the signal candle, and sell price 3 ticks above the close of signal candle, so that we can get a tick advantage. If a high candle formed, so enter half candle price. What to do if we miss the signals? sometimes, we miss a buy signal after several candles. We can still enter the market by referring to the nearest support as a buy area and resistance as a sell area. For attention, do not proceed into market if 1. the price breakdown a support or 2. if we have missed the signal too far DISCLAIMER; This post is not meant to be a buy/sell call, just ideas and research analysis based on measurement tools.
MYX:FCPO1!Education
by TraderAsist
3
JOET vs MTUM & an Understanding of ETF WeightingsThe purpose of this idea is two fold. 1) To discuss the fundamental differences between Market-Cap & Equal-Weighted ETFs & 2) To compare JOET & MTUM ETFs. The first half will cover topics specific to ETFs. The second half and very last section offers a comparison of the funds and conclusions to consider when choosing one. Feel free to skip to the bottom if the analysis or conclusions related to the ETFs is all that you wish to read. Definitions Market Capitalization = (stock price * outstanding shares) Momentum is the speed or velocity of price changes in a stock, security, or tradable instrument. Momentum indicates a stock’s price strength. (Source: Investopedia) Market Cap Weighted Indices Mechanics In market cap weighted indices, price plays a key role of weight. Asset allocation goes to stocks with rising prices over time, while allocation to stocks with decreasing prices, becomes smaller. Behavior Inherently momentum oriented. Concentrated on the winners. Anti-value like dynamic when weighting toward market cap. Performs the strongest in a growth based market or when you have concentration in some sectors or stocks but not others. Conversely, concentration risk is realized if a stock or sector’s market cap becomes concentrated regardless of actual growth and then crashes (eg. 2000 dotcom bubble). Equal-Weight Indices Mechanics In Equal-Weight indices, allocation is spread evenly across all stocks and regularly rebalanced at a predetermined time interval. Rebalancing Stocks in an index which have increased from equal weight average will be in excess of the average weight. The excess (difference between the new price and the price at the average weight) is sold. Stocks which have decreased from the last rebalancing will be below the average weight and the difference is bought. This mechanism ensures all stocks share an equal weight at the time of rebalancing. Because rebalancing typically occurs at predetermined time intervals (often quarterly), there will usually be a degree of asset allocation unbalance between those intervals, as stocks go up and down. Rebalancing daily isn’t practical and would lead to higher management costs. Behavior Broader exposure to the overall market. Favors value stocks and smaller sized companies. Protects against concentrated risk in a few stocks that may dominate a market cap weighted index. Performs the strongest when there is broader market participation and when smaller size / value stocks are in favor. Costs Equal weighted ETFs have higher turnover from rebalancing weighting = higher fees and higher capital gains taxes Market Cap & Equal-Weighted (MISC) Both Equal and Market Cap weighted ETFs require reconstitution or adjustments of their holdings as stocks fall in or out of their parameters of measurement. Examples could be: mergers, delistings, or new inclusions from the parent or underlying index the fund is tracking. --- MSCI USA Momentum Factor ETF - MTUM Dividend Yield: 1.01% Expense Ratio: 0.15% Hierarchy MSCI USA Index (Parent Index) MSCI USA Momentum SR Varient Index (Underlying Index*) MSCI USA Momentum Factor ETF (The Fund / MTUM) *On November 23, 2020, the Fund’s Underlying Index changed from MSCI USA Momentum Index to the MSCI USA Momentum SR Variant Index Prospectus notes “ uses a representative sampling indexing strategy to manage the Fund. “Representative sampling” is an indexing strategy that involves investing in a representative sample of securities that collectively has an investment profile similar to that of an applicable underlying index.” “The Underlying Index is designed to measure the performance of an equity momentum strategy by emphasizing stocks with high price momentum, while maintaining reasonably high trading liquidity, investment capacity and moderate index turnover....” “The Fund generally will invest at least 90% of its assets in the component securities of the Underlying Index and may invest up to 10% of its assets in certain futures, options and swap contracts, cash and cash equivalents, including shares of money market funds advised by BFA or its affiliates, as well as in securities not included in the Underlying Index” How does MTUM determine the makeup of a “Momentum” stock? The exact calculation is not published but, MTUM screens for the best performing US Large and Mid-cap stock price returns over the past three years, 12 months, & 6 months as a factor for inclusion into the fund. What is MTUM’s reconstitution strategy when adding / removing stocks from the fund? MTUM cites using a statistical model published in the Journal of Finance: N. Jegadeesh and S. Titman, “Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency.” Journal of Finance, 1993. The research suggests, buying past winners and selling past losers, you can achieve profitable returns. Thesis of the model: Buy past winners and sell past losers in multiple time configurations. (only two configurations are selected in practice) Winners measured over 12, 6, 3, or 1 months prior to the time of purchase. Top winners are selected (selected stocks). Performance of selected stocks are measured over 12, 6, 3, or 1 months after the time of purchase. Winners & losers are selected. Buying more of the winners and selling the losers occurs. Takes advantage of short term market inefficiencies and lag time between corporate events and price movements. Eg. earnings announcements. The research conducted demonstrates buying winners and selling losers works within a 12 month timeframe. Beyond 12 months the strategy breaks down. Because MTUM reconstitutes the fund semi-annually and profitability using this strategy occurs within a 12 month period of time, the fund should be able to realize similar profitable outcomes. Virtus Terranova U.S. Quality Momentum ETF - JOET Dividend Yield: Dividends reinvested Expense Ratio: 0.29% Hierarchy: Terranova U.S. Quality Momentum Index (Underlying Index) Virtus Terranova U.S. Quality Momentum ETF (The Fund / JOET) How does JOET determine the makeup of a “Momentum” stock and the ETF? Screens 500 US large cap stocks for the last 12 months’ total return (technical indicator) 500 then ranked based on momentum and quality Momentum is ranked based on the last 12 months’ total return Quality is ranked based on: return on equity (net income divided by average shareholder equity) debt to equity (total liabilities divided by total shareholder equity) sales growth rate (annualized sales growth rate over the past three years). Pick top 250 The 250 Stocks are then again quality ranked based on the same metrics above. Top 125 chosen for the inclusion into the Underlying Index and used in the fund. Equal weighted / rebalanced quarterly What is JOET’s reconstitution strategy when adding / removing stocks from the fund? Their strategy mimics the above, rebalanced & reconstituted quarterly. --- Factors to consider when selecting JOET vs MTUM Costs of ownership / fees / dividend yield -- JOET is nearly 2x more expensive than MTUM, excluding any dividend yield. MTUM’s ~1% dividend yield is also a consideration when selecting. Stock Selection -- MTUM uses a more technical approach to stock picking, rebalancing, and reconstitution. JOET uses a combination of both technical and fundamental (quality) indicators when stock picking, rebalancing, and reconstitution. Timeframe & Concentration Risk -- With concentration risk in MTUM’s market cap weighted fund, you must consider the forward 12 month performance for the sectors most heavily weighted. Historical data shows equally weighted outperform market cap weighted indices (there are exceptions by sector). Equally weighted indices do a better job of mitigating single-stock event risks. If a stock takes a header during an earnings announcement, the impact on the fund will be lower if in an equally weighted fund. Sector weighting inside the funds -- JOET & MTUM stock selection begins with the largest US market cap weighted stocks. JOET holdings are equal-weighted, but not the sectors that make it up. JOET is made up of ~33% Tech & ~22% Healthcare stocks. 4 of the top 5 weighted sectors make up the majority of both funds. Conclusion / Determination This mostly boils down to deciding which fund does a better job of stock picking. JOET & MTUM use different stock selection techniques for inclusion into their respective funds, however, both utilize market cap weighted indices when making initial stock selections, leading to similarly skewed sector weighting in both funds (particularly Tech & Healthcare). Although, while sector weighting is concentrated similarly in both, the underlying holdings making up those sectors are largely different. Of the roughly 125 stocks in each ETF, only 48 names are shared in both ETFs. If you believe a more technical stock picking process, weighting, rebalancing, and reconstitution strategies will work better, MTUM is the winner. MTUM does carry a higher degree of concentration or single-stock event risk and is not as diversified across sector allocation vs. JOET. However, during times when market cap leaders are leading, MTUM will outperform. If you believe a combination of technical and fundamental quality factors for stock picking & reconstitution strategies will work better, JOET is the winner. JOET is more expensive to own with a higher expense ratio. However, by nature of being equal-weighted, longer term hold durations should have stronger positive outcomes, and lend credence to value-like holdings that have not yet surprised to the upside. JOET also provides exposure to what Virtus believes are higher quality stocks with stronger fundamentals, as that is a criteria for their selections. Because JOET is less than 12 months old, historical performance cannot be compared with MTUM’s. Additionally, because MTUM recently changed the underlying index used for stock selection and inclusion into the fund (Nov 2020), its historical performance cannot be used as an indicator or expectation of how the fund may perform moving forward.
JEducation
by MichaelGoldberg
2
Trading Plan for the week commencing 4 NOV 2019Friends, I hope you had a great trading week. Some of the currencies did not move much last week. For example YEN (-0.22%), CHF (+0.3%), GBP(+0.24%) and EUR (+0.15). That means if you traded these currencies most likely you closed your trade too early as you believed your trades not moving in the direction predicted but the fact is that they did not move at all and it requires time and patience. But great move by CAD (+1.65%), AUD(+0.82%), USD (-0.74%) and NZD (+0.73%). All above stats are based on weighted averages on Weekly charts. Now let’s review the possible scenarios for the coming week. USD (Bearish) If you remember last week I said USD will be bearish but it has some upside room. This is what has happened during the FED meeting and completed the task after NFP. Indeed USD had 5 losing sessions. For next week I think you can see the target in the chart below Look at USDOLLAR Weekly. What else you want as a confirmation of a bearish move? Breakout, visiting the breakout area and off the EMAs. US 10 years Yields has been trading inside a wedge formation and I am in favour of down move as it is below EMAs and Sellers have a target on the lower band of the formation. EURUSD for the first time broke the falling trend line (Weekly) and pulled back into the breakout area and bounced again and closed nicely higher off the EMAs. Similarly Cable closed above the falling trend line after almost a year I bet you love USDCAD chart Weekly. Very clear and transparent breakout, bounce and rejection of the major resistance area AUDUSD did not quite broke the resistance but with a massive bullish move last week, it adds to the bearish USD scenario. USDJPY on weekly does not look convincing bearish as Stock made all time highs last week but we had only a negligible +0.13% in USDJPY and see all EMAs above. Same as NZDUSD weekly as NZD has been depreciating massively over the last a few months and taking this higher needs a lot of efforts from Buyers. We may have Inverted H&S and every 101 months NZDUSD make a Turn. We are in months 102 right now! AUD (Bullish) Last week this Currency highlighted as Bullish, Similarly in the coming week I will remain Bullish however we have very strong resistance on the way up. Any move higher will be limited and profit should be banked sooner for this currency. Similar to NZD, this currency is ready to break to the topside. See the inverted H&S. This is what happened last week for AUD (H1) NZD (Mutual) Last week I was bearish on this currency and I was wrong. But right now see very strong resistance above it on D1. At the same time on NZDUSD it has a very nice Inverted H&S which suggest a bullish move. Overall I think there might be a change in the sentiment for NZD and it may turn into a bullish market but the question is when? To be honest I do not know and currently I have two positions on this currency over the weekend. NZDUSD Long and NZDCHF Long. First one look fine but I am in lose on NZDCHF. CHF (Bearish) Last week I was bearish on this currency and for the coming week I will remain bearish. It is trading below the pitchfork median and EMAs. Until it the resistances are not broken I will remain bearish EUR (Bullish) EUR is not going anywhere and if you trade any EUR cross, you should focus on the counterpart as EUR moving slower than a snail. But it is trading above the support as you can see. GBP (Bullish) Sterling not going anywhere too but it has a target up there. I think we might have a quick spike to the upside and then it turns lower. JPY (Bullish) Yen is not going anywhere too! The fact that Stocks made all time high we should have seen big bearish move on YEN but we did not. Gold moving higher puts pressure on YEN to stay higher and it has a lost of room to go higher. Going lower is more challenging considering the current level of supports below. If Stocks pulls back next week then USDJPY will be a great Short trade. Thanks for reading this post. Have a great weekend. KHAN
FX:USDOLLAREducation
by khansalarehsan
1