Richard,
Why do you play only one side of the market?? Aren't you giving up a potentially large % profit? If your exit signals are reliable ( and I have no doubt that they are), then why not use them on weak stocks and short? I started reading these TA threads at their inception last fall, and tried to follow on free web sites like IQ for a few months until I outgrew them (at least in my estimation), and went with WOW and QP. What made me try your concept of TA was that I had tried the concept (pattern recognition) on Thomas West's thread (TA for shorts and longs) but was losing almost as much as when I gave brokers a more or less free rein with stock picks.
What I have evolved into since December is a trader from the short side only--at least as long as it is profitable. Many media gurus insist momentum investing is dead--as with any widely followed system it carries the seeds of its own destruction--it simply has too many adherents. Any way you name it--the overall system virtually everyone on this thread uses is a momentum-investing-style. (I'm sure I'll catch some flak amid denials for that statement!! <g>)
I'm rambling, but using momentum-investing-techniques ONLY on the left side of the mountain seems like a waste of talent. Momentum is momentum--it makes no difference if it is up or down--momentum will work as reliably down the right side of the mountain--in fact I submit it works better because it is a given that stocks fall at a faster rate than they ever rose. Stocks that have peaked and are rolling over are far easier for me to pick than trying to sort out those that have started to rise and ascertaining whether or not they will continue to do so.
I asked a question here last Nov or Dec about shorting, but got a minimal response that I should only short weak stocks and that since the preferred universe in the recommended database was only stocks with ES/RS >80, there were no weak stocks to look at.
It seems to me that to be truly helpful in diseminating TA, the short-side shouldn't be given such short-shrift (pun not intended).
Over the past few months (obviously in a down market) I have been very successful in shorting using primarily Andy's StochRSI (8,5)crossover of the StochRSI (14) to screen on both daily and weekly charts for overbought stocks, and then do a more indepth study to finalize choices. I'll use other indicators if testing indicates any that are historically good on a specific stock. Always look at CCI as for some reason there is a very high correlation with StochRSI. NEVER forget trend lines. If there is anyone that is actively shorting now, would really appreciate any methods, ideas, indicators, etc that are working.
BTW, I only had time to read this weeks posts tonight, but simple trend lines on the NASDAQ COMP indicated that if it didn't strongly break through resistance on Wed, it would head back down. Too late now to take issue with Bill H's new-fangled indicator that said NAZ had turned the corner Wed. IMO, support is at 1175 even if market tries to go up tomorrow.
Regards,
Gary |
