The Landry Momentum Score
A simple breadth plot that helps you get in and get out at the right time.
"He will win who knows when to fight and when not to fight." ~ Sun Tzu
Welcome to the second article of the Breadth Template series.
A series of articles discussing all the Trend-Momentum templates through which you can gauge the Trend and Momentum of the market. These are essentially breadth indicators. Read the first article on Mswing.
I will discuss the Landry Momentum Score today (link at the end of the article)
The Landry score is a Breadth momentum score. Momentum in the market is an absolute necessity for traders to make money. Landry score quantifies the number (or percentage) of stocks that are in momentum. It essentially tells you when you should be in the market and when you should go fishing. It gives you the HARD momentum.
Landry Trend Score:
The idea of this breadth indicator comes from this little-known book by David Landry called “Dave Landry on Swing Trading”.
In Chapter 3, Trend Qualifiers, David measures the strength of a trend (aka momentum) by using the ADX indicator. He writes, “an ADX reading of 30 or higher with +ADX > -ADX denotes a strong uptrend.”
When a stock displays this high ADX, it is in a very strong momentum (HARD momentum).
The Landry Trend score counts the number or the percentage of stocks in the NSE universe that qualify David’s criteria.
The criteria are listed below:
ADX(14) >= 30
+DI(14) > -DI(14)
Here is the Landry Momentum score plot.
Currently, only 18 stocks qualify the Landry momentum criteria, around <2% of my liquid tradable universe.
How to Interpret the Landry Score:
Quite simple actually.
A falling Landry plot means decreasing market momentum.
A rising Landry plot means increasing market momentum.
Landry above the 200-250 threshold (>20% of the tradable universe), the market is in a bullish regime. Below that, the market is in a bearish regime.
Therefore the best time to be trading long is when the plot is above the bullsih regime and rising.
And the worst time to be trading long is when the plot is below the bearish regime and declining.
Divergence in the Landry plot and the Index can signal Tops and Bottoms efficiently.
Here is another way I interpret the Market based on this plot:
Above Threshold and rising = Easy Money
Above Threshold and declining = Hard Money
Below threshold and rising = Hard Money
Below threshold and declining = No Money
Landry Score Weekly: For Positional Timing
The same plot can also be used in the weekly timeframe. This is more suited for the positional style of trading.
The interpretation remains the same as is for the daily plot.
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Link to the Landry Momentum plot: