Reply With QuoteGood stuff Spaf. In layman terms. What we got here is a head and shoulders.
1250 better hold:
http://stockcharts.com/def/servlet/SC.web?c=spx
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Slow Stochastic
Slow Stochastic [Momentum Indicator]
Another turn and bank indicator.
The Slow Stochastic applies further smoothing to the Stochastic oscillator, to reduce volatility and improve signal accuracy.
Ranging Markets
Signals are listed in order of their importance:
1. Go long on bullish divergence (on %D) where the first trough is below the Oversold level.
2. Go long when %K or %D falls below the Oversold level and rises back above it.
3. Go long when %K crosses to above %D.
Short signals:
1. Go short on bearish divergence (on %D) where the first peak is above the Overbought level.
2. Go short when %K or %D rises above the Overbought level then falls back below it.
3. Go short when %K crosses to below %D.
Place stop-losses below the most recent minor Low (or above the most recent minor High) when going long (or short).
Trending Markets
Only take signals in the direction of the trend and never go long when Stochastic is overbought, nor short when oversold.
The shape of a Stochastic bottom gives some indication of the ensuing rally. A narrow bottom that is not very deep indicates that bears are weak and that the following rally should be strong. A broad, deep bottom signals that bears are strong and that the rally should be weak.
The same applies to Stochastic tops. Narrow tops indicate that the bulls are weak and that the correction is likely to be severe. High, wide tops indicate that bulls are strong and the correction is likely to be weak.
Use trailing buy- and sell-stops to enter trades and protect yourself with stop-losses.
Long:
If the Stochastic (%K or %D) falls below the Oversold line, place a trailing buy stop. When you are stopped in, place a stop loss below the Low of the recent down-trend (the lowest Low since the signal day).
Short:
If Stochastic rises above the Overbought line, place a trailing short stop. When you are stopped in, place a stop loss above the High of the recent up-trend (the highest High since the signal day).
Exit:
Use a trend indicator to exit.
Permission to reproduce material on the Slow Stochastic indicator is conditional upon displaying a hyperlink to http://www.incrediblecharts.com/tech...stochastic.htm on your website.
Good stuff Spaf. In layman terms. What we got here is a head and shoulders.
1250 better hold:
http://stockcharts.com/def/servlet/SC.web?c=spx
Ditto:
http://stockcharts.com/def/servlet/SC.web?c=indu,uu[m,a]daclyyay[pb50!b200][vc60][iUb14!La12,26,9]&pref=G
Better get back above 10855 or get out your parachute.
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http://stockcharts.com/def/servlet/SC.web?c=ndx,uu[m,a]daclyyay[pb50!b200][vc60][iUb14!La12,26,9]&pref=G
Breaks below 1650 - night, night.
A view of the STO
Wiz,
I don't think Mr. Market is looking very good, because of the ups and downs of energy.
I hear that he already has his air sick bag ready!
Spaf, I agree. However - it is the yield curve doing this. Crude over $30 is slow death for this economy. Yield curve is just finishing us off.
Mr. Market is set to roll over here. Getting to a point where the sell programs are going to start kicking in. Leaving Mr and Mrs Bagholder with that old deer in the headlights look.
The financial stocks are toast. The big tech stocks are toast. Now GOOG, SIRI and AAPL are taking body blows.
When the highflyers are getting knocked out the sky - bye bye.
Last edited by Wizard; 02-04-2006 at 08:06 AM.
Some examples:
C - http://stockcharts.com/def/servlet/SC.web?c=c - TOAST
BAC - http://stockcharts.com/def/servlet/SC.web?c=bac,uu[m,a]daclyyay[pb50!b200][vc60][iUb14!La12,26,9]&pref=G DEAD
WFC - http://stockcharts.com/def/servlet/SC.web?c=wfc,uu[m,a]daclyyay[pb50!b200][vc60][iUb14!La12,26,9]&pref=G - DIEING
this is because of the yield curve inversion that Mr Birchy tells you is different this time.
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Big Tech:
INTC - http://stockcharts.com/def/servlet/SC.web?c=intc,uu[m,a]daclyyay[pb50!b200][vc60][iUb14!La12,26,9]&pref=G All ready in sell programs - it is toast
IBM - http://stockcharts.com/def/servlet/SC.web?c=ibm,uu[m,a]daclyyay[pb50!b200][vc60][iUb14!La12,26,9]&pref=G - Died on thursday
CSCO - http://stockcharts.com/def/servlet/SC.web?c=csco,uu[m,a]daclyyay[pb50!b200][vc60][iUb14!La12,26,9]&pref=G - hanging by finger nails
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High flyers
SIRI - http://stockcharts.com/def/servlet/SC.web?c=siri,uu[m,a]daclyyay[pb50!b200][vc60][iUb14!La12,26,9]&pref=G sell programs all ready kicked in - only one left is the idiot retail investor.
AAPL - http://stockcharts.com/def/servlet/SC.web?c=aapl,uu[m,a]daclyyay[pb50!b200][vc60][iUb14!La12,26,9]&pref=G - will go into free fall when it breaks 70
GOOG - http://stockcharts.com/def/servlet/SC.web?c=goog,uu[m,a]daclyyay[pb50!b200][vc60][iUb14!La12,26,9]&pref=G bye bye - this one is toast.
Re: Slow Stochastic
EFA chart.
One of the most reliable signals is to wait for a divergence to develop from overbought or oversold levels. Once the oscillator reaches overbought levels, wait for a negative divergence to develop and then a cross below 80. This usually requires a double dip below 80 and the second dip results in the sell signal. For a buy signal, wait for a positive divergence to develop after the indicator moves below 20. This will usually require a trader to disregard the first break above 20. After the positive divergence forms, the second break above 20 confirms the divergence and a buy signal is given.
Example
In the IBM example above, it is clear that acting solely on overbought and oversold crossovers can generate false signals. Using crossovers of %D (slow) by %K (slow) can result in some good signals, but there are still whipsaws. By looking for divergences and overbought/oversold crossovers together, the 14-day Slow Stochastic Oscillator can produce fewer yet more reliable signals. The Slow Stochastic Oscillator produced 2 solid signals in IBM between Aug-99 and Mar-99. In Nov-99, a buy signal was given when the indicator formed a positive divergence and moved above 20 for the second time. Note that the double top in Nov-Dec (gray circle) was not a negative divergence -- the stock continued higher after this formed. In Jan-00, a sell signal was given when a negative divergence formed and the indicator dipped below 80 for the second time.
Socrates: "Democracy, which is a charming form of government, full of variety and disorder, and dispensing a sort of equality to equals and unequaled alike."
Re: Slow Stochastic
Thanks, Show-Me. I've noticed that negative divergence on the MSCI EAFE, also.
Another thing to note is that positive divergence on the S&P would have given you the buy signal for the C Fund during the week of July 17. Here's the chart:
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