MethodologyTake control of T&T indicators, models and tables !
T&T TREND FOLLOWING MODELS AND INDICATORS
To simplify, we consider two types of financial player : Asset Manager and Trader.
For an asset manager, we advise to follow the trend all the time, being fully invested, reducing exposure or being neutral.
Traders feel comfortable being buyer or seller. They used a risk management model and are comfortable working against a trend…
We will specify for each strategy if they fit to asset manager or trader.
We analyze a market on several time frame: Long, Medium, Short term (LT, MT, ST) and some time on an intraday basis.
THEORETICAL EXPOSURE – ASSET MANAGER – TRADER
T&T has created its own trend following models dedicated for each period of time. In order to appreciate the trend in a glance, we used green color to materialize a bull trend, and a red color for a bear trend.
For an asset manager, assuming that “the trend is our friend”, we usually consider the Long term trend as the main trend. If the long term trend is bullish, we will initiate only long position. It means that when we enter in a ST bearish trend, we sold the Long position but we won’t enter short (a trader regarding its risk reward ratio may probably short)
At the next ST bullish signal occurring, we will open a new bullish trade.
In 2003 and in 2009 I have been able to precisely anticipate the final low target months ahead but even if my customers were prepared, they were under panic and did not intervene. In accordance with the T&T methodology, I have told Asset manager to take their profit on their hedge, but I told traders to be bullish as much as possible in full respect of their risk management ratio.
On the last page of each document, you will find a READ MODE. We explain how to get the right interpretation for each technical instrument or model. You will find also a disclaimer seriously encouraging you to recognize your entire responsibility in the way you understand the message, the charts, and make your own investment decisions.
Easy reading for the CHARTS:
T&T RSI : we use the Relative Strength Index mainly as a trend indicator and not as an overbought or oversold indicator, because a market can remain oversold for very long periods (2000-2003). Above 50, the trend is Bullish and vice versa.
T&T oscillator :first of all, to get a Bullish trend, we need an oscillator above 1. Secondly, the MA, in red or green, shows the oscillator momentum. The cross between the indicator and the moving average can be used as a trading trigger. To be more efficient, you may open a Long position only if the cross between the oscillator and the MA occurs above 1. When the oscillator is above 1 and a Bearish cross occurs, it is not a sell signal, it is only time to reduce the exposure or to close the trade.
T&T OBV curb : the On Balance Volume is an indicator taking into account the price and the trend of the last iteration. If the volume is more consistent than usual it will impact heavily the OBV curb. We use several MA to fliter the OBV trend.
T&T Equity Trading + : as long as we trade above the LT yellow strip, we can only open Long position. To initiate them, we need the asset price to be above its ST MA strip (Green area). When the asset price fell below the ST strip, the trade can be closed or the exposure can be reduced.
T&T Scoring : it is a compilation of several oscillator lengths. Usually, we can consider that the trend is Bullish above 0 or Bearish below 0, but according to the asset category we prefer to apply a « Neutral area » around 0 to avoid or limit false impulsions linked to consolidation periods.
T&T Strip 20+ or Fast Strip : it is a compilation of 4 indicators: RSI + Oscillator + OBV + ST moving average strip. A BULL trend is drawn in green above 0 and a BEAR one is in red below 0.
T&T Strip 60+ or Slow Strip : same than the T&T Strip 20+ but with a MT moving average strip.
T&T CMF : Chaikin money flow indicates accumulation (green) or distribution (red) volume.
What is a STRIP ? we use a channel made of two moving averages to determine the trend. We need a close above the upper one to become bullish. On the opposite, a close below the lowest moving average and we get a bearish signal (red) . If a buying trade is already running and then the price comes down between the 2 moving averages, you can accumulate more positions as long as we don’t see a close below the lowest moving average.
IMPORTANT : our methodology is a mixed approach with results extracted from: trend following models, support-resistance levels, quantitative trend profile. Don’t be surprised if sometimes, the T&T trend appearing on the chart is different than the one indicated in the table with the ST,MT and LT trend and their own reversal levels.
Read mode for the SCORING – RANKING :
This spreadsheet gives you a qualitative view of the index components based on technical indicators.
On the top, you get the average value obtained from the index components.
Absolute scoring : this corresponds to the obtained result for each components.
Relative scoring : Difference between the components and the average result obtained with the index components. With the green and red color you may see whether it’s an outperformer or whether an underperformer one’s.
The scoring is a T&T qualitative tool. It enables us to obtain a rank for each asset class. We sort the sample from the best to the worst scoring to get a ranking.
On the right of the spread sheet, you can measured how each stocks behave compared to the index for several time frame.