Pros – Why am I right?
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Cons – Why am I wrong?
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“It’s all about confirmation of key buy & sell signals, along
with good money management.”
Stochastics
MACD
Money Flow Index
***Note RSI as well.
WMA Crossover Signals
Short Term Buy: 7D WMA crossing up & over 19D WMA Short Term Sell: 7D WMA crossing down & under 19D WMA Long Term Buy: 7D WMA crossing up & over 41D WMA Long Term Sell: 7D WMA crossing down & under 41D WMA
Trade Checklist – Confirmation!
- S.P. Closing Above/Below 7WMA - MACD Buy/Sell Signal (Crossing Over)
- Stochastics Buy/Sell Signal (Buy 1/Sell 1)
- WMAs Buy/Sell Signal (7WMA Crossing over 19WMA), (Buy 2/Sell 2)
- Weekly Charts (MACD, Stochs & WMAs) Date: ……… Company:………... Position - Long/Short:……….………. Stochastic - Daily:………. Stochastic - Weekly:………. MACD:………. Money Flow Index:……… Sector Chart (Stage Analysis):……… Support Price Points:……… Resistance Price Points:……….. Open Target Price:……… Close Target Price:……… Position Amount:……… Target ($ & %):……… Stop Loss:……….
Length of Time:………
Announcements/ Due:……….. Risk Return Ratio:………. Risk Ratio/Portfolio:………... Should I have multiple positions…………. ……… Earnings Report Due:……….. ………. Dividend Due:………. Dow, All Ords, and Sector Charts:………...
Stochastic Oscillator (WMA)
A technical momentum indicator that compares a security's closing price to its price range over a given time period. The oscillator's sensitivity to market movements can be reduced by adjusting the time period or by taking a moving average of the result. It also gives good divergence signals.
A bullish divergence occurs when the stock price makes new lows while the Stochastic fails to make new lows.
A bearish divergence occurs when the stock price makes new highs while the Stochastic fails to make new highs.
***Lines crossing over indicate more certainty***
Short Term Buy: 7D WMA crossing up & over 19D WMA Short Term Sell: 7D WMA crossing down & under 19D WMA Long Term Buy: 7D WMA crossing up & over 41D WMA Long Term Sell: 7D WMA crossing down & under 41D WMA WMA Crossover Signals
It won't pick tops and bottoms, but allows you to take 80% of the next bullish trend.
The first major buy signal is the Bullish Crossover (7D WMA crossing up & over 41D WMA) signal. The buy, sell (Short Term Buy: 7D WMA crossing up & over 19D WMA, Short Term Sell: 7D WMA crossing down & under 19D WMA) signals thereafter are short term
trades where you sell the `trading position` within the larger `long buy position’. With this trading capital, sell, then re-enter to top up again on the next buy signal.
Exit the trade totally when there is a Bearish crossover (Long Term Sell (Close): 7D WMA crossing down & under 41D WMA) signal.
The cycle repeats, each time accumulate more shares on the next bullish crossover signal. Most instances you will see 2-3 short term signals between the Bullish and Bearish crossover.
A momentum indicator that is used to
determine the conviction in a current trend by analyzing the price and volume of a given security. The MFI is used as a measure of the strength of money going in and out of a security and can be used to predict a trend reversal. The MFI is range-bound between 0 and 100 and is interpreted in a similar fashion as the RSI.
Buy signal: Rising from around 20 Sell Signal: Toping and/or falling from 80
Traders also watch for a move above or below the zero line because this signals the position of the short-term average relative to the long-term average. When the MACD is above zero, the short-term average is above the long-term average, which signals upward momentum. The opposite is true when the MACD is below zero. As you can see from the chart, the zero line often acts as an area of support and resistance for the indicator.
MACD – Moving Average Convergence Divergence Indicator
The MACD is a trend indicator, and partly minimises the delays obtained with the usage of simple moving averages (SMA).
There are two basic ways to se MACD:
Crossings – A buy signal appears when MACD crosses upwards with the blue line crossing and staying above the red line. A sell signal would be the reverse – red crossing over the blue, and while staying above the blue line, falling in a downward trend.
The divergence between the MACD histogram and the price quote identify major reversal points and give strong buy/sell signals.
A bullish divergence occurs when stock prices make new lows while the MACD histogram fails to make new lows.
A bearish divergence occurs when the stock price makes new highs while the MACD histogram fails to make new highs.
The bullish and bearish divergences are more significant when the MACD is in an overbought or oversold level
The signals appearing in longer time horizons (weekly, monthly etc.) generate larger price movements.
The P/C Ratio thus measures the degree of bullishness or bearishness in the market, based on the ratio of Puts purchased to Calls purchased (i.e. Daily Put Volume/Daily Call Volume = P/C Ratio). The Chicago Board of Options Exchange (CBOE) calculates the P/C Ratio for all equity and index options traded in their Daily Market Statistics. Traditionally, a P/C Ratio of .80 or greater is considered bearish. Readings above 1.00 over a number of trading days are considered strong signs of a market bottom. Below 1.0, the readings are considered neutral in the . 40-.50 range, and extremely bullish at readings below .30. The lower readings are considered strong signs of a topping market nearing a reversal. Note that technicians regard extreme high or low readings as contrarian signals. The value of the Put/Call ratio is thus in determining when sentiment extremes have been reached, as such
extremes tend to give way to their opposite.
Fibonacci Retracement
A term used in technical analysis that refers to areas of support (price stops going lower) or resistance (price stops going higher). The Fibonacci retracement is the potential retracement of a financial asset's original move in price. Fibonacci retracements use horizontal lines to indicate areas of support or resistance at the key Fibonacci levels before it continues in the original direction. These levels are created by drawing a trendline between two extreme points and then dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%.
A breakout often retraces to 50% of the breakout move (e.g. stock goes from 20c to 50c, the retracement might be back to 35c – 50%).
Daily Put/Call Ratio
The P/C Ratio is derived by dividing the total number (volume) of option put contracts purchased by the number of option calls, for a given trading day. For those unfamiliar with options trading, options are contracts that give the purchaser the right, but not the obligation, to buy or sell a security at a specified and guaranteed price, called the "strike price." Options to buy are called "Calls," while options to sell are called "Puts." The option buyer can exercise their option so long as the underlying stock or index has achieved or bested the strike price no later than the day of expiration. Calls, therefore, imply the buyer is optimistic (bullish), whereas Puts imply the buyer is fearful of, or anticipates, a decline (bearish).
