November 3rd, 2010

Trading Stocks 24x7x24

As you know, like most other technicians, I see 1220 as a crucial hurdle (that’s the market’s previous high set in April). The market’s crossing above that level with any sort of volume it should clear the way for a sustained bull market since there is only a brief respite at around the 1310 and then a clear shot at the all-time high of 1550. Let me tell you what I’ve been doing while I’ve been waiting for the market to assault the 1220 resistance level.

I was scrolling through my chart system the other day and again noticed the continually shrinking number of US-based stocks among all those in the database. Although the total number is around 7500 charts, less than 5000 of them are actually stocks. The rest are ETFs, preferred stocks, funds and stocks that are no longer trading due to acquisition. Of the total, about a third are ADRs (American Depositary Receipts of foreign stocks). Interestingly, most of the IPOs (initial public offerings) actually are Chinese rather than US stocks.

The simplest way to own non-US stocks is by way of ETFs and there are currently over 50 long and short ETFs of foreign stocks. Most are capital-weighted so a large percentage of the funds are in stocks that are also available on an individual basis as ADRs on US-exchanges. FXI, the Chinese ETF, also includes stock in a large number of smaller, non-ADR, companies but their representation is much less because they have smaller capital values.

So far, Fidelity offers trading in stocks listed on the following non-US exchanges:

But it’s a much bigger world out there than just Europe; here’s a list of some of those Far Eastern exchanges:

You need to add several Indian exchanges to the list for good measure.

I’ve been looking for charting software plus sources for end-of-day closing data (current and historical) for foreign stocks traded on their local exchanges. The benefit of my technical and charting approach to my stock market activity is that I can approach foreign stocks as if they were commodities. I could let the local investors, both professional and individual, conduct the fundamental business and financial analysis on the companies themselves.

They make their own decisions as to whether the stocks are over- or undervalued while I could piggyback on their investment decisions by focusing on the supply and demand dynamics for the stocks themselves.

I’ve discovered two sources offering free software that I’m learning and experimenting with:

I’m still learning and experimenting but who knows, one day in the not too distant future we may be trading for 24-hours on 24 international stock exchanges in any one of 20,000 stocks (how about this … 24 x 7 x 24). There’s no way fundamental analysis works in this environment; technical analysis finally wins.

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  • day trading tips

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