So how do people use a "macro filter" ?

[sss12]

So taking a day such as today with general weakness across U.S. equities.....

If you came across a specific bullish trade set up on an individual security that you found attractive, would you discount it due to the macro weakness in the market ?

Or asked differently, how much credence do you put towards the macro when making micro decisions ?

Obviously, no right/wrong....just want to hear feed back on how traders intermingle the two. Thanks

 

[Robert Morse]

I would think a strong stock in a down tape is worth a look. I like those myself.

 

[vanzandt]

So taking a day such as today with general weakness across U.S. equities.....

If you came across a specific bullish trade set up on an individual security that you found attractive, would you discount it due to the macro weakness in the market ?

Or asked differently, how much credence do you put towards the macro when making micro decisions ?

Obviously, no right/wrong....just want to hear feed back on how traders intermingle the two. Thanks

I was gonna say the same thing as RM.
You should have a shopping list. Market sell-offs provide excellent opportunities for individual stocks caught in the downdraft if one does their homework in advance.

 

[beerntrading]

So taking a day such as today with general weakness across U.S. equities.....

If you came across a specific bullish trade set up on an individual security that you found attractive, would you discount it due to the macro weakness in the market ?

Or asked differently, how much credence do you put towards the macro when making micro decisions ?

Obviously, no right/wrong....just want to hear feed back on how traders intermingle the two. Thanks

I often have what I call wrong-way drivers...definitely informed by my macro sentiment, and usually a hedge position.

It carries with it certain risks and rewards unto itself...been propped up and beaten in the last month with such positions.

 

[lindq]

So taking a day such as today with general weakness across U.S. equities.....

If you came across a specific bullish trade set up on an individual security that you found attractive, would you discount it due to the macro weakness in the market ?

Or asked differently, how much credence do you put towards the macro when making micro decisions ?

Obviously, no right/wrong....just want to hear feed back on how traders intermingle the two. Thanks

Your question goes to the issue of why many traders move to indexes, instead of the index component equities.

Focusing on the index alone can help remove at least the uncertainty of "What the hell is happening with the stock?"

 

[lawrence-lugar]

Your question goes to the issue of why many traders move to indexes, instead of the index component equities

Focusing on the index alone can help remove at least the uncertainty of "What the hell is happening with the stock?"

I agree,
I personally find dealing with individual stocks to be like flirting or dancing or befriending a joker wildcard,

Trading a broad ETF or index is much more logical or predictable or manageable,

But to answer the OP's question, an individual stock is always more or less affected with the macro market. Generally speaking. -- If it moves away from it, that's an anomaly because of some weird, temporary variable.

 

[ironchef]

Very good question.

I trade individual stocks options but I don't think I can pull the trigger buying an up stock in a down market. My tendency is to buy one that goes lower but with high relative strength (e.g., IBD ranking).

 

[beerntrading]

Your question goes to the issue of why many traders move to indexes, instead of the index component equities.

Focusing on the index alone can help remove at least the uncertainty of "What the hell is happening with the stock?"

I agree,
I personally find dealing with individual stocks to be like flirting or dancing or befriending a joker wildcard,

Trading a broad ETF or index is much more logical or predictable or manageable,

But to answer the OP's question, an individual stock is always more or less affected with the macro market. Generally speaking. -- If it moves away from it, that's an anomaly because of some weird, temporary variable.

Well, flip side to index trading is you give up the big moves up with the big moves down (hint: individual stocks have big moves up...and down, markets have big moves down...and only down).

But I cannot for the life of me read an index or ETF chart to see bullish or bearish signals.

That also might be why I have no problem taking up a wrong-way driver.

 

[comagnum]

What your talking about is a large function of what us discretionary swing/momo traders do - always looking for divergences. Those doing well in a broad sell off - especially hitting all time highs like the DJ airline index did today is where I will look to go long.

In beat up bear markets looking for the first stocks to build a base and move up will usually be the ones leading the next bull market. Some of these stocks will outpace the index by a huge margin.

This applies to shorting as well. Leadership stocks break down first before the indexes.