A Top-Down

Engineering Approach
to Profit from the
Global Stock Market
(Brief Version)

KH Tang
30 March 2010
 How Big is the Global Market?

• A report by World Federation of Exchanges [WFE] for the

period ending April 2007 (excludes investment funds and
some markets such as Russia). Their data indicates that the
market cap of the U.S. stock markets account for only 36.4%
of the world market capital of $56.4 trillion.*

* This is a very dynamic data, as global currency conversion rate and stocks are fluctuate every moment.
Anyhow, it does provide a big picture of how things are composed.
 How Does Distributed?

• Americas - 42.4%
(Russell 3000 – 36.3%, S&P500 – 31.8%, Canada – 3.2%, Brazil – 1.5%,
Mexico -0.5%)

• Asia/Pacific - 25.8%
(Japan – 8.3%, China, 6.9%, India – 3.2%, Australia – 2.3%, Korea – 1.6%,
Singapore – 0.8%)

• Europe, Africa & Mid-East - 31.8%

(Three major shares are from Germany, France & United Kingdom)
 Why do you need to know these?

• In this “Globalized Business World”, the economy in one part of the

world is directly or indirectly influence by the business of the other
part of the world. Especially by the economies of the few big
brothers – like the economy of US would influence the
manufacturing capacity of China, etc.
Therefore, the global stock markets tend to conform the movement
of each another.

• The trend of the currency exchange rate of a country can add fuel
to speed up the rate of the up raising stocks or down falling stocks.
Having a “Global View” can take the advantage of riding the leaders
in both directions.

• Capitalize on the Sector/Country Rotation worldwide.

 How to go about doing it?

• Data Acquisition of Major Stock Markets.

• Grouping of Stock Data – by countries and by sectors.
• Ranking of Group Strength – by countries and by sectors.
• Using others ranking/filtering techniques, such as Strength
Forecast, and Multiple-Time-Frame to sort the trading list.
• Using Rotational Trading to:
- Long the Strongest Candidate (ETFs or Indices)
- Short the Weakest Candidate (ETFs or Indices)**.

** Heavily traded ETFs or Index Funds are much better trading vehicle than
individual stock as it is much harder to manipulate.
Example: By Sectors
Example: By Countries
 Example: By Listing

Strongest Candidates List for Long

Strongest Candidates List for Short

Example: By Visual RS & Traffic Lights
References:-
http://blessedfool.blogspot.com/2009/10/stock-market-tools-engineering-approach.html
http://blessedfool.blogspot.com/2009/10/stock-market-tools-2-sector-rotation.html
http://blessedfool.blogspot.com/2009/10/stock-market-tools-3-multiple-time.html

Examples:-
http://lionshares.blogspot.com/

"La guerre! C’est une chose trop grave pour la confier à des militaires."
"War is too important to be left to the generals."
-Georges Clemenceau (1841-1929): A French journalist, physician and statesman. He served
as Prime Minister from 1906 to 1909 and from 1917 to 1920.

With the same token, I would suggest that:-

Personal Finance matter is Too Important to be left to the Financial
Advisors!

Bless you
KH Tang
http://blessedfool.blogspot.com/2010/03/stock-market-tools-8-global-trading.html