As of 12/07/2022
  Indus: 33,598 +1.58 +0.0%  
  Trans: 13,768 -130.21 -0.9%  
  Utils: 973 -6.18 -0.6%  
  Nasdaq: 10,959 -56.34 -0.5%  
  S&P 500: 3,934 -7.34 -0.2%  
YTD
-7.5%  
-16.4%  
-0.8%  
-30.0%  
-17.5%  
  Targets    Overview: 12/01/2022  
  Up arrow35,500 or 32,800 by 12/15/2022
  Down arrow13,400 or 14,500 by 12/15/2022
  Up arrow1,000 or 925 by 12/15/2022
  Up arrow12,000 or 10,600 by 12/15/2022
  Up arrow4,250 or 3,850 by 12/15/2022
CPI (updated daily): Arrows on 12/5/22
As of 12/07/2022
  Indus: 33,598 +1.58 +0.0%  
  Trans: 13,768 -130.21 -0.9%  
  Utils: 973 -6.18 -0.6%  
  Nasdaq: 10,959 -56.34 -0.5%  
  S&P 500: 3,934 -7.34 -0.2%  
YTD
-7.5%  
-16.4%  
-0.8%  
-30.0%  
-17.5%  
  Targets    Overview: 12/01/2022  
  Up arrow35,500 or 32,800 by 12/15/2022
  Down arrow13,400 or 14,500 by 12/15/2022
  Up arrow1,000 or 925 by 12/15/2022
  Up arrow12,000 or 10,600 by 12/15/2022
  Up arrow4,250 or 3,850 by 12/15/2022
CPI (updated daily): Arrows on 12/5/22

Bulkowski on Trading with the Trend

How many times have you read or heard the phrase, "Trade with the trend" and how many times has someone proved it?

I decided to take a look. I used my actual trades, but culled the list by excluding:

For each trade, I determined how the S&P 500 index faired over the hold time and how other stocks in the same industry did. I examined the closing price of the index from the date I bought the stock to the date I sold it. For the industry, I used the same method but counted the number of stocks closing higher versus those closing lower over the hold time. If the counts tied (such as when 3 stocks in the industry closed higher and 3 closed lower), they were not included in the analysis.

Market:UpDown
Industry up15%7%
Industry down-7%-10%

Trade with the Trend: Results

The table on the right shows the results. When the S&P index closed higher over the holding period for each trade and stocks in the same industry also closed higher, the trades gained an average of 15%, the best result of the bunch. When both the index and industry closed lower, the trades lost an average of 10%. That's the worst combination.

If the market climbed, but the industry suffered, I lost 7%. Finally, when the industry climbed but the market dropped, I made 7%.

The results say two things. First, trade with the market and industry trend for the best results. Second, it's more important that the industry is doing well than it is for the index to be moving up. That surprised me.

-- Thomas Bulkowski

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My novels:  Bedroom to Boardroom book Remember Me book Bumper's Story book Head's Law book
My stock market books:  Chart Patterns: After the Buy Getting Started in Chart Patterns 2nd edition book Trading Basics book Fundamental Analysis and Position Trading book Swing and Day Trading book Encyclopedia of chart patterns book Encyclopedia of Chart Patterns 3rd Edition book Trading classic chart patterns book

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