How to use Stock Index review?

Individual stock’s performance is usually affected by the index performances of its market, as the index represents the overall market’s opinion at moment. Therefore, it is worthwhile to pay attention to where key stock index stands before adjusting your investment portfolio, just like checking weather report before going out.

Stock index review example:

With data-driven methodology, our team assess the short-, mid-, and long-term direction of key stock indices in U.S and Asia. The time range is estimated and used based on statistic anaylsis of historical data of individual stock and stock index:

- When Short-term direciton signal changes, it usually takes a few days for index direction to reverse, but in extreme case, it may take up to 1.5 weeks.

- When Mid-term direciton signal changes, it usually takes between 1.5 weeks to 8 weeks for index to change direction.

- When Long-term direciton signal changes, it takes at least 8 weeks to change and usually it takes much longer than 8 weeks. 

Take S&P 500 performance in 2022 as an example, 

- On 2022/02/09, long-term direction changed to downside, and remained down trend as table above shown in Nov 2022.

- The 2022 mid-March bounce and July-August rally are two of the mid-term direction changes.

- During July-August rally, there are several short-term changes happened and each lasted for a few days. 

When short term direction lasts long enough and gains momentum, it will enforce mid-term direction to change. Same for mid-term to long-term direction change. Therefore it is worthywhile to check short-term direction everyday to be prepared for potential big change later on. 

As a quant team based in Hong Kong, we internally use this tool every day to monitor key market dynamics and incoproate insights into our investment. We use this tiny website to record our findings and share our opinions. You may take it into consideration before changing your invement portfolio.