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A Profitable Observation

03/22/17 04:38:34 PM
by Koos van der Merwe

In analyzing the stock market, should you look at daily or weekly charts?

Security:   SGCX,IID
Position:   Buy

Buying shares on an intraday basis is what day traders do. They have their weather born trading strategy that they have used for years, a strategy that gives them good profits. However, there are many investors who simply do not day trade. They have jobs, earn a comfortable salary and are continually looking for solid growth investments that will give them a comfortable yearly return. In analyzing the stock market, while identifying a share to buy and hold, I have found that looking at a share on a weekly basis has given me a greater return than looking at a share on a daily basis. The program I use to analyze the market is Omnitrader. The indicators that trigger a buy and sell signal are the RSI 14 Period and the JM Internal Band. The JM Internal Band is a 15 period simple moving average offset by 2% positive and 2% negative. A move above the upper band suggests a buy and below the lower band a sell.

Figure 1. Spreadsheet of daily and weekly portfolio.
Graphic provided by: EXCEL spreadsheet ..
The chart in Figure 1 is an Excel spreadsheet of trading for the month as of March 17th. At the start of each month, the spreadsheet starts from zero.

In both cases, I have limited the number of shares purchased to 5 only. In January the Daily spreadsheet gave a profit of $204 whereas the weekly spreadsheet gave a profit of $336. In February, the daily spreadsheet gave a loss of $260 while the weekly spreadsheet shows a profit of $548. To date in March, the daily stocks show a loss of -$1142.00, -7.24%, while the weekly spreadsheet has a profit of $895.00, 9.90% of total invested. Note also that the buy triggers of the program suggested an investment of $15773.00 for the daily chart while the weekly investment was $9039.00.

Figure 2 Daily Omnitrader chart of Sunridge Gold Corp.
Graphic provided by: Omnitrader.
The chart in Figure 2 is an Omnitrader chart of Sunridge Gold Corp. The chart shows that the JM Internal Band strategy gave a buy signal on March 17th while the Aroon Indicator gave a buy on March 14th. The RSI indicator is trending down, which is why I only purchased the share on March 17th. However, I shall be including the Aroon indicator in the future if it continues to out perform.

Figure 2. Weekly Omnitrader chart of ING Intl High Dividend Equity.
Graphic provided by: Omnitrader.
The chart in Figure 3 is a weekly chart showing that the Aroon Strategy gave a buy on January 23rd, while the JM buy was on March 17th.

Following the present Omnitrader strategy, namely JM strategy and RSI 14 Period strategy, has given acceptable weekly profits but losses on daily analysis. Is this suggesting that weekly analysis is the way to go? I shall be including the Aroon strategy from April 1st on both the daily and weekly charts and determine whether profits will increase, and hopefully on daily charts as well. What is troublesome is that the weekly strategy gives better profits than the daily strategy, but then, working on a weekly strategy, I will have more time to play golf on weekends with President Trump. Have a good giggle.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

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