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TECHNICAL INDICATORS
Technical indicators have become more important than Fundamentals. With the proper use of technical indicators investors are able to determine what stocks to buy or sell and when. The most important aspect of technical indicators are the PARAMETERS.
Technical Indicators
Support Levels Moving Averages Linear Regression Lines Volume Bars Stochastics Time Segmented Volume * Money Stream *
* Leading Indicators
Resistance Levels Bollinger Bands MACD Balance of Power * Price Rate of Change Relative Strength Wilders RSI
VOLUME
It is very important to remember that volume goes with the trend. This means it is normal for volume to increase along with prices and to decrease as prices decline. When volume is going with the trend i.e.. moving in the direction of the price it is telling us one thing and one thing only, the prevailing trend is healthy as far as this relationship is concerned. When prices are declining, it is normal for volume to decline as well . This means downside breakouts from price patterns often occur with relatively low volume.
If volume expands as prices decline, this emphasizes the bearishness of the breakout, since it represents greater enthusiasm of sellers. As with all upside breakouts, volume is key. It must expand on the breakout to indicate enthusiasm and therefore a change in the supply and demand in favor of demand.
UPWARD TREND
MOVING AVERAGES
A moving average is the sum of whatever you are examining (closing prices of a stock) for a number of days (20, 30, 50, 100, or 200) then divided by the total number of days.
Example
$56.06 + $59.31 + $56 + $55.56 + $56 + $57 and $56.26 = $393.93 Now divide $393.93 by 7 (total number of days) = $56.27 average price.
BALANCE of POWER
Balance of Power is commonly referred to as BOP. BOP tells us whether the underlying action in the trading of a stock is characterized by systematic buying (accumulation) or systematic selling (distribution). Its plotted above or below its zero line.
ZERO LINE
POSITIVE BOP
BOP DIVERGENCE
BULLISH GROUPING
BEARISH GROUPING
MACD
MACD is very similar to the price moving averages except that it uses 3 exponential moving averages instead of one or two.
1. Shorter time frame (8-16 days) 2. Longer than the first time frame (18-24 days) 3. Period 5-21 days
ADVANCE WARNING
BULLISH SIGNAL
BEARISH SIGNAL
WILDERS RSI
Wilders RSI is a very commonly used lagging indicator. When used with Time Segmented Volume (TSV) and the right parameters it becomes a very powerful indicator. The combination of a lagging indicator (Wilders RSI-14) and a leading indicator (Time Segmented Volume-18) helps identify a better entry and exit point.
WILDERS RSI
RSI TSV
STOCK SCANS
Stock scans are similar to a prized family recipe. You add a select amount of certain ingredients (technicals and parameters) to create the perfect recipe. Stock scans can be created for all market conditions giving investors the ability to select good strong investments for all market conditions.
KEY TO TECHNICALS
1. Use technical indicators that work with your trading style (short-mid-long term). 2. Change the parameters when the markets change (bullish or bearish). 3. Utilize GOOD stock scans with your most rewarding technical indicators. 4. Back test your beliefs to increase your confidence (minimum of 6 months).
MONTHLY CD CLUB
Being a member of the monthly CD club is an exciting way to receive information on a monthly basis on several different Stock Market topics, such as: STOCK PICKING SCANS INVESTMENT STRATEGIES TECHNICAL INDICATORS INTERVIEWS WITH SUCCESSFUL TRADERS AND MUCH MORE! Monthly memberships include (1) audio/video CD:
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