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Spotting Intraday Trends In Real-Time

01/06/12 09:04:56 AM
by Donald W. Pendergast, Jr.

If you're an equities daytrader, it makes sense to keep abreast of the strongest and weakest daily performers in your watchlist.

Security:   SBUX
Position:   N/A

Some days, everything just seems to go a trader's way; the stock indexes are uniformly bullish, the stocks you prefer to daytrade are also on a tear and your systems or methods are working like your own personal intraday ATMs. But then there are the other kind of market sessions where the broad market is in a trendless funk (for that particular day, anyway) and you're not getting any big market-moving earnings reports or economic/geopolitical news events that can get things moving.

So what do you do, hang it up for the day and move on to other more profitable pursuits, or do you just fritter away time staring at your trading screen -- or even worse, start making risky trades simply because you're bored stiff? The answers are "Not necessarily," "No," and "Definitely not." Here are a few simple methods that you can use to help find especialy strong/weak stocks or ETFs on days when the broad market stock indexes seem to be just treading water (Figure 1).

FIGURE 1: STRONG TRADABLES. Five of the strongest stocks/ETFs as measured by their intraday performance against the spiders (SPY).
Graphic provided by: TradeStation.
Graphic provided by: TradeStation RadarScreen.
The examples shown are for TradeStation users, but virtually all intraday trading platforms provide the same basic kinds of relative strength (RS) analysis screens. First off, get your watchlist of favorite daytrading stocks (the wider the sector/group diversity, the more trading opportunities you are likely to locate) and then go to File/Open Workspace and then select the preinstalled Relative Performance workspace. Click on it and the workspace will open; just populate it with your watchlist of stock tickers and then format the relative strength parameters. I am using the Relative Strength (One Day) analysis technique for this particular group of stocks, and I am using SPY as the basis for all RS calculations. See Figure 2.

As I write this just before lunchtime on January 4, we see that the SPY is down by (0.19%) on the session, but that SBUX is up by 2.27%, DE by 1.78%, and UNG by 1.70%. Clicking on the header of the RelStr column, the worst daily performers appear, with the poorest daily performers at the top. Here we find that MA is down by (3.26%), POT by (2.20%), and GNW by (2.19%).

This is valuable info for a serious daytrader to possess, so now if we want to check out the intraday chart of SBUX, simply right-click on its ticker symbol and then click Create/Chart Analysis for SBUX. A five-minute chart of SBUX will appear; it's easy to see the strong daily uptrend in this stock. In fact, had I run this RadarScreen scan after the first hour of the regular daily session (at 10:30 am), I would have seen that the stock was in a modest pullback, just before going on a 60-cent run higher.

Of course, I would have used a proven technical system or discretionary methodology before attempting to trade such a setup, but at least I would have had the added security of already knowing that the stock was strongly outperforming the .SPX on this particular day. Prior to pulling the trigger on an intraday trade, I would also be monitoring the status of the intraday NYSE TRIN and tick, too, to help stack as many of the probabilities in my favor as possible.

FIGURE 2: WEAK TRADABLES. Four of the weakest stocks as measured by their intraday performance against the spiders (SPY).
Graphic provided by: TradeStation.
Graphic provided by: TradeStation RadarScreen.
Daytrading may not be every market participant's cup of tea, but for those who love to flip stocks intraday, learning how to monitor and then using the daily relative strength data available can be an indispensable tool, one that can keep you on the right side of nearly any market. Check it out.

FIGURE 3: SBUX, FIVE-MINUTE. Stocks with strong intraday trends are definitely preferable to those that are chopping within a range, and that leave traders clueless about direction. SBUX is clearly in a bullish trend, far outperforming the .SPY on this particular day.
Graphic provided by: TradeStation.

Donald W. Pendergast, Jr.

Donald W. Pendergast is a financial markets consultant who offers specialized services to stock brokers and high net worth individuals who seek a better bottom line for their portfolios.

Title: Writer, market consultant
Company: Linear Trading Systems LLC
Jacksonville, FL 32217
Phone # for sales: 904-239-9564
E-mail address:

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