I am very happy you took my post as a positive contribution. I can be rather intense at times.
I have found that the most reliable indicators I have found so far are: resistance lines, which includes horizontal support and resistance lines, MAs, trend lines and trend channels, and volume. The RSI, MACD, and Stochastics are supporting indicators to what the resistance lines and volume tell me. They can shelp sort out amiguous situations and also help me anticipate price moves.
The RSI is an unusual indicator that takes a little effort to learn how to use. It tend to mimic the price action of the stock. So many times, this indicator will tell me nothing much more than what the price action of the stock can tell me except wether the stock is oversold or undersold. For a stock that is in a strong uptrend or downtrend, this is even meaningless. Also, many stocks do not have thier RSI move into the "buy" or "sell" zone in order to give more traditionsal entry and exit signals. However, there are a significant number of times that thisw indicator does tell me more than the stock itself which I then find very useful.
The MACD is a good indicator to time purchases with. I think if the length of the underlying MA was changed, this indicator can also be used to time exits. It is a combination of an oscillator and a trend indicator. This is another indicator that can be used in different ways like the RSI. The Stochastics is a more straightforward indicator that is best used for timing exit points. As with other indicators, some sotcks do well with Stochastics, and others do not do so well. I recommend backtesting of any indicator before selecting the indicator you will use. I adjust the length of the underlying MA for each indicator in order to tune it for the stock.
I am currently investigating the use of the rrate of change indicator (ROC). I aminvestigating the possability of using this in conjunctionwith volume to give me an indication wether the price action of the stock will break through or bounce off of a resistance line it is approaching.
I also find price patterns useful. At the very least, it gives me a qualitative view of what underlying supply and demand action is occuring with the stock. Also, Japanese candlesticks can be useful in helping to determine significance of the day to day price action of the stock and see if it supports what I already think the stock is going to do. There are helpful daily price patterns to look for. However, I do not buy into it as much as others may.
How did you know I place John Murphy at the top as a technical analyst?? How did I give myself away? By the way, he has a free weekly market letter available on the Internet. :) |
