Wednesday, November 13, 2013

Which market is stronger?

I show YM (Mini Dow Futures $5), NQ (Mini Nasdaq Futures), ES (Mini S&P 500 Futures) and TF (Mini Russell 2000 Futures) in the chart above. Through out 2013, no doubt Nasdaq is the best performer. However for the past week, Nasdaq seems to lose strength relative to S&P 500 and Dow. From the chart, we may say that the strongest of the four is YM.

Why I want to compare their strength? Obviously for trading reason. I hold a believe that if I want to buy, I will buy the strongest market. Conversely, I only wanted to short the weakest market. Usually strongest market will perform better if market trends up and weakest market will drop faster and bigger in magnitude in overall bearish environment. By capitalizing this strength differences in several similar markets (in this post all indices futures), I hope to capture the biggest and most profitable move.

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