Navigating Market Timing: Insights on $BABA and $BIDU
Written on
Understanding Market Timing Strategies
Market timing is often dismissed as an impossible endeavor, yet certain indicators suggest otherwise, especially in the case of stocks like $BABA and $BIDU.
Short-term swing trading involves a straightforward approach: when the New York Momentum Oscillator (NYMO) trends upward, investors should consider purchasing stocks at the next market open. Conversely, if the NYMO trends downward, it signals a sell-off at the next opening.
For those employing a longer-term swing trading strategy, the New York Stock Index (NYSI) provides similar guidance. An upward trend in the NYSI indicates it's time to buy, while a downward trend suggests moving to cash or shorting stocks during the next market open. Both the NYMO and NYSI are derived from the McClellan Oscillator and are regarded as leading indicators of market psychology, reflecting shifts between fear and greed.
Section 1.1 The Importance of Market Indicators
Most stocks tend to perform in alignment with market trends, which is a fundamental principle for traders.
On May 17, I previously mentioned how the NYMO signal indicated a potential uptrend for both $BABA and $BIDU, which had recently moved beyond their respective Darvas Boxes. As the day concluded, I anticipated that both the NYMO and NYSI would show upward momentum the following day. Unless bearish forces dominated, a rally seemed imminent in the upcoming days or weeks.
To be continued...
Currently, let's analyze $BABA and $BIDU, known as the Chinese counterparts in the Fang Index and the leveraged Fang ETF, FNGU. After just three trading days, both stocks were already showing significant gains based on the NYMO signal.
Despite their promising trends, the bears intervened, pushing these stocks back into their previous trading ranges. Traders could either secure profits at the upper limits of these ranges or maintain their positions with a stop-loss set at the lower limits.
Section 1.2 A Heads Up on Market Movements
As I indicated earlier, "to be continued" serves as a cautionary note, urging traders to remain vigilant. The NYSI provided an additional buy signal at the market's open on May 24, followed by a series of short-term swings on the NYMO beginning May 26.
As we stand now, the anticipated market surge has indeed materialized...
Both stocks have witnessed remarkable upward movements. Was there specific news driving this? Ultimately, it doesn’t matter; the performance is what counts. Gains based on the NYMO/NYSI signals have been extraordinary for both stocks.
Chapter 2 Market Insights Through Videos
In the video "Warren Buffett: Market Timing Is Both Impossible And Stupid," Buffett shares his perspective on the futility of attempting to time the market, emphasizing a long-term investment approach.
The second video titled "PreMarket Prep: China stocks down on Trump Executive Order | August 7" discusses the impact of geopolitical events on stock performance, particularly focusing on Chinese stocks.