My favourite indicator is Trend

The Norwegian business newspaper Finansavisen asked Investtech’s R&D Manager Geir Linløkken which is his favourite indicator. Which indicator is in a league of its own, which you would choose if you could only use one tool?

This was Mr. Linløkken’s reply:

Simple: my favourite indicator is Trend!

The Trend is by far the most important indicator in the stock market. Rising trends indicate that the company or the market is experiencing positive development and that buy interest among investors is increasing.

Investtech has worked on quantitative and technical stock analysis since 1998. Trend analysis has been central to our analyses and recommendations to private and professional investors since the beginning. A research report we did on 14 years of data from the Oslo Stock Exchange showed that:

• stocks in rising trends rose on average by 2.7 percent the following month
• stocks in falling trends fell on average by 1.1 percent the following month

The report is based on 3,747 signals from stocks that entered a rising trend and 2,792 signals from stocks that entered a falling trend.

Trend is an indicator it’s easy to follow. Every day Investtech’s computers identify the qualitatively best trend for each stock. Stocks in rising trends should be bought and stocks in falling trends should be sold.

The development of stocks that entered rising and falling trends from five days before the signal was triggered until 22 days (one month) after the signal was triggered.

The Finansavisen published an excerpt in an article called «The favourite tools of the professionals» (“Proffenes favorittverktøy”) on Saturday May 11, 2013.

Keywords: Finansavisen,Indikator,Trend.