Explanation of trading with the summation
I usually use the nasdaq and nyse summation indexes.
These give an excellent picture of the index averages.
An old trader friend of mine told me how to follow it and it is a very good indicator, IMO.
I'll pass it along to you guys:
Using stockcharts.com, You can do this with the free membership(as I do).
Ticker= $nasi(nasdaq) $nysi(nyse)
use indicator RSI=14 and macd=12,26,9
1 yr chart using candle sticks
size= lanscape
select "price labels"
simple mvg avg = 5 and 10
If RSI get to 90=Very, very overbought
"" RSI drops to 10=very, very oversold
I generally don't start looking for a change of trend until the rsi gets over/under 70 or 30.
When the 5 mvg avg crosses the 10 mvg avg. thats a confirmation(I usually don't wait that long tho,,lol)
The macd crossover is also a confirmation indicator.
Hey, this is not the end all be all, but another tool to put in the toolbox and I find it a very accurate indicator.
Give it a spin and see what you think. I've been using it with success for several years. Works best with an index trade.
Just an additional note,,,when/if the mkts start going up big one day, down big the next, etc. May signal a change in trend as well.
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