As of 04/12/2024
  Indus: 37,983 -475.84 -1.2%  
  Trans: 15,498 -250.79 -1.6%  
  Utils: 855 -6.47 -0.8%  
  Nasdaq: 16,175 -267.11 -1.6%  
  S&P 500: 5,123 -75.65 -1.5%  
YTD
 +0.8%  
-2.5%  
-3.0%  
 +7.8%  
 +7.4%  
  Targets    Overview: 04/12/2024  
  Up arrow39,800 or 37,700 by 05/01/2024
  Up arrow16,200 or 15,000 by 05/01/2024
  Up arrow885 or 850 by 05/01/2024
  Up arrow16,700 or 15,800 by 05/01/2024
  Up arrow5,250 or 5,025 by 05/01/2024
As of 04/12/2024
  Indus: 37,983 -475.84 -1.2%  
  Trans: 15,498 -250.79 -1.6%  
  Utils: 855 -6.47 -0.8%  
  Nasdaq: 16,175 -267.11 -1.6%  
  S&P 500: 5,123 -75.65 -1.5%  
YTD
 +0.8%  
-2.5%  
-3.0%  
 +7.8%  
 +7.4%  
  Targets    Overview: 04/12/2024  
  Up arrow39,800 or 37,700 by 05/01/2024
  Up arrow16,200 or 15,000 by 05/01/2024
  Up arrow885 or 850 by 05/01/2024
  Up arrow16,700 or 15,800 by 05/01/2024
  Up arrow5,250 or 5,025 by 05/01/2024

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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