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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: Mark Davis who wrote (12115)	3/1/2001 7:53:34 PM
From: TheStockStalker	Read Replies (4) \| Respond to of 18137

Now that there are QQQ's and SPY's that are quite liquid, what is the justification for trading a dozen or more stocks ? Unless you are able to hand pick the strongest and weakest stocks consistently, its a lot of trouble, I do not want to equal the performance of an index I want to beat it. So if I only buy the stocks making new highs from some consolidation and avoid the ones making new lows, I will outperform the index everyday. I am also buying stocks based on the individual chart patterns and not the Index or Futures chart patterns. Before an index turns up it means that most the stocks that make up that index have ALREADY turned up enough to offset the ones that are down. I like to already be in those individual leaders before the crowd which is jumping in solely because the index is just beginning to turn up again. They are already late. IOW I trade in the direction of the market BUT get into stocks based on individual chart patterns and not index patterns. I can make more money in the leaders than I can in just the Q's. What is so hard about hand picking stocks that are going up? I am not guessing which ones are going up but actually buying the ones that are actually in the process of going up. It is worth the "Trouble".. PDT

To: Mark Davis who wrote (12115)	3/1/2001 10:51:49 PM
From: LPS5	Respond to of 18137

smoothes out performance so that you are pegged more to the market as a whole[.] Only, of course, to the extent that your basket has issues contained within said indices. If you've got a basket of bank stocks, which are notoriously underweighted in the S&P500, for example, you're not going to get the same kind of moves. Not even close - that's obvious. And that is also the reason for which firms and funds trade baskets of stock. If my performance is indexed against the S&P500, I can buy the futures or the DRs (SPY). Same thing with the Nasdaq100 and the Q's. That's a passive portfolio strategy, which few investors and even fewer plan sponsors will pay for; they could do that themselves, in house. But if I seek to actively manage a portfolio in such a way that my exposure is largely the same, with proprietary models over- and underweighting certain issues as per performance expectations, well, I have to build that take on the S&P500 (or whatever index) from scratch. Also, quant shops will build lists of stock that are highly correlated over a limited time period and have absolutely nothing to do with one another in sector. They could appear a disparate mix of listed and OTC stocks that in reality share certain risk characteristics that make them similar, albeit fleetingly. For this reason, these lists of stock have to be generated, the trades executed and at the appropriate time liquidated - and may never in that exact form be utilized again, as the underlying fundamentals shift. Futures products and DRs don't, and will never, have a broad enough audience to make the packaging of this kind of product worthwhile, and the very nature of the composition of such lists is proprietary and unique from firm to firm. LPS5