Would like to share this thought with fellow traders, sort of brainstorming on the forum, for the collective benefit of all. might look like a funny thought, but why not
i would like to create a "Bullishness" indicator, on a scale from +100 (very bullish) to -100 (very Bearish), that can be used with different time periods aggregations), timeframes, ..etc, to show how a stock/ETF behaves, and maybe provides a signal (crossing 0 up or down), when combined with another confirming idicator and price/volume action to confirm the move.
the idea is also to use this "bullishiness" indicator as a custom watchlist field, or for scanning for stocks that start a significant move (say above/below 30% "bullishness" positive/negative).
i haven't seen anything like that, and have couple of ideas. but wanted to share the question with the group for better insight. i will develop it on ToS and share in the forum once we settle on a practical, usable definition (i'm sure there will be many ideas, definitions, ..etc - and some can be used as it's only a relative metric anyways)..
to start the ball rolling, here's my current thought process:
1 - analyse the behavior of a stock that had a very bullish run recently, notice the kind of price & volume behavior .. do the same for one that had a very bearish move.. build an indicator around that on the required scale (100 to -100)
2 - combine with existing proven indicators (like RSI or Stoch Momentum), in this point, i would take a NET of a Fast vs Slow periods (will make periods adjustable - let's use RSI as example) and calculate another score on same scale
3 - something else, maybe volume based?
4 - combine all scores and average to the required scale (100 to -100), and create the plot/visulaize, and also use as a WatchList field (to calulcate automatically for any stocks you add to it)
so initial thought looks like this:
Bullish = continues to close at the upper half of EMA Channel of highest highs, lowest low of period (can use BB instead of MAChannel)
+ has a high NET RSI for fast and slow period
+ NET MFI high for same fast and slow period (to represent volume/money flow)..
what other ideas, or key behaviors you think should be reflected? or in simple terms, how do you define a "very Bullish" stock? ("very bearish" will be the opposite side) ..
pls share your thoughts & experiences. if you seen something like this somewhere, pls can you share a pointer,
You might want to check how it is done with Market Profile. It uses the rotational factor to evaluate how bullish or bearish or neutral a day is. See this video it might give you some ideas (warning, you may fall asleep while listening to it but that's the price of admission):
Market Edge - Dr. Market Edge
You might take a poll of where folks think (hope?) the market will be in say six months, - same as Investors Intelligence does. - Sine no one can "really" predict the future, - it's more of a guessing/hoping type of thing.
to define market condition, rather to respond too it. Rising price can be characterized in so many ways. For example, lack of offers, is that bullish? Not really. But in the absence of offer side participation, price may creep up. Just think the price action is to dynamic or should say the conditions that create price pressure too dynamic and too diverse to generalize.
thanks for the responses guys .. pls note we're not trying to evaluate how bullish is the "market" for a given period, or the "period/day/week" relative to others - the attempt is to evaluate how "bullish" is a certain stock for a given period. the goal statement is that we should reach some acceptable definition that can be then interpreted into a mathematical type of score, used to plot a chart, compare stocks together, and make beter informed decisions (buy/sell) ..
here's an example.. one guy may say: "bullish for me means it has to be within 10% of its 52-week high, which means it just made that new high, or in a rally to break it upward"
as you can see, this is a "condition" that we can translate into a formula and make it part of a "bullishness" score ..
go ahead, take a shot, think of what a bullish stock must show you, to make you say, this is a bullish stock move.
This post has been selected as an answer to the original posters question
Simple answer: Bullish is if the price is up, bearish is if the price is down. Or alternatively if someone thinks that price might go up or might come down.
But careful. If the bulls enter bearish territory, this is very bullish, well, unless the bears manage to defend it. In that case the territory can still be considered bearish. The bears may also conquer bullish territory, which would be bearish, both the move and then the territory, unless the bulls defend it. There are also pigs. The pigs are those who are not sure whether they are bulls or bears: They are sitting on the fence and wait until they are slaughtered.
Bullishness can be measured via hundreds of indicators:
-> the slope of a moving average
-> bid versus asked traded volume
-> price being above or below a benchmark for the prior day (VWAP, POC)
-> market sentiment
Here is a little multi-timeframe indicator, which measures the bullishness versus the bearishness. It is an offensive indicator, not because it offends anyone, but because it measures the bull's and bear's strength as their capacity to penetrate hostile territory. The division of the territory is achieved via an EMA. The territory above the EMA is bearish, the territory below the EMA is bullish.
Therefore the bullpower is obtained as High - EMA, whereas the bear power is obtained as Low - EMA.
The indicator shown on the chart calculates bull and bear power on a higher timeframe. As a side effect it shows the range of the higher timeframe bars.
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