The Awesome Oscillator for Highland Floating Rate Opportunities Fund (HFRO) is showing a five day consistent downtrend, signaling building market momentum for the shares.  Author and trader Bill Williams created The Awesome Oscillator Indicator (AO) and outlined the theory and calculation in his book “New Trading Dimensions”.  The indicator shows the difference between two simple moving averages that can help define moving strength of the market. Bill Williams developed this indicator on the basis of earlier existed MACD and made a number of changes. The Awesome Oscillator subtracts a 34 period simple moving average (SMA) from a 5 period SMA. It illustrates what’s happening to the market driving force at the present moment.  The interpretation is similar to MACD including buying when the oscillator crosses through the zero line to the upside and selling when it crosses back below. Of course, this will result is many false signals in flat or choppy markets.  As with most indicators, the AO is best used alongside additional technical signals.

Investors may be searching for stocks that are undervalued. Scanning the markets during obvious pullbacks may be one strategy, but it may take a more concerted effort to identify these names if the market decides to climb further. Getting caught up in the details from news and various economic reports may leave the average investor dizzy and confused. Focusing on the most important data sets may be helpful when trying to muffle all the noise. Heading into the next quarter, investors will be watching which companies are experiencing positive earnings momentum. Often times, earnings that vastly beat expectations may cause the stock to skyrocket. Filling the portfolio with stocks experiencing positive earnings momentum may be a popular choice. Investors may want to look a little bit deeper into the situation to make sure that the momentum is justified. Some investors may already be adept at figuring this out while others may need to put in a bit more work. 

Another technical indicator that may assist in measuring the strength of market momentum is the Average Directional Index or ADX. At the time of writing, the 14-day ADX for Highland Floating Rate Opportunities Fund (HFRO) is standing at 19.09. Many chart analysts believe that an ADX reading over 25 would suggest a strong trend. A reading under 20 would suggest no trend, and a reading from 20-25 would suggest that there is no clear trend signal. The ADX was created by J. Welles Wilder to help determine how strong a trend is. In general, a rising ADX line means that an existing trend is gaining strength. The opposite would be the case for a falling ADX line.

Highland Floating Rate Opportunities Fund (HFRO)’s Williams Percent Range or 14 day Williams %R is sitting at -89.87. Typically, if the value heads above -20, the stock may be considered to be overbought. On the flip side, if the indicator goes under -80, this may signal that the stock is oversold. The RSI, or Relative Strength Index, is a commonly used technical momentum indicator that compares price movement over time. The RSI was created by J. Welles Wilder who was striving to measure whether or not a stock was overbought or oversold. The RSI may be useful for spotting abnormal price activity and volatility. The RSI oscillates on a scale from 0 to 100. The normal reading of a stock will fall in the range of 30 to 70. A reading over 70 would indicate that the stock is overbought, and possibly overvalued. A reading under 30 may indicate that the stock is oversold, and possibly undervalued. After a recent check, the 14-day RSI is currently at 29.67, the 7-day stands at 20.89, and the 3-day is sitting at 11.11.

Taking a look at another technical level, Highland Floating Rate Opportunities Fund (HFRO) presently has a 14-day Commodity Channel Index (CCI) of -153.11. Typically, the CCI oscillates above and below a zero line. Normal oscillations tend to stay in the range of -100 to +100. A CCI reading of +100 may represent overbought conditions, while readings near -100 may indicate oversold territory. Although the CCI indicator was developed for commodities, it has become a popular tool for equity evaluation as well. Moving average indicators are used widely for stock analysis. Many traders will use a combination of moving averages with different time frames to help review stock trend direction. One of the more popular combinations is to use the 50-day and 200-day moving averages. Investors may use the 200-day MA to help smooth out the data a get a clearer long-term picture. They may look to the 50-day or 20-day to get a better grasp of what is going on with the stock in the near-term. Presently, the 200-day moving average is at 13.74 and the 50-day is 13.48.

Some investment professionals believe that a great way to find, study, and invest in equities without getting completely overwhelmed, is to have a systematic and research driven approach. Of course, the same approach may not work for everybody. One investor may find one way that works for them, and another investor might find something completely different when it comes to portfolio picking. Trading and investing can carry a major emotional component. Even after careful research, being able to pull the trigger on a trade may still involve squashing the fear that comes with the thought of being wrong. Finding continued success in the stock market may entail keeping the portfolio balanced, but also finding the courage to get in when necessary, or get out when needed. Developing this confidence may take a lot of practice and determination.