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Strategies & Market Trends : Technical Analysis- Indicators & Systems
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To: CharlieChina who wrote (2891)11/5/1997 6:22:00 PM
From: GW Riedeman  Read Replies (1) of 3325
 
The stacked stochastics are a way to combine the insight a variety of stochastic time frames give to a stock's price movement. The shorter number of periods denote (obviously) short time movements, and so on. Different traders are looking for different price movement charateristics, so to accommodate time frame variations, Jack introduced a weighting factor into each stochastic term; in this way, you can assign whatever importance you want to a particular time frame. You will end up with a composite "grade" for your stock that will reflect this weighting. From here on, it is up to the individual as to how to evaluate this composite number.

The stochastic is a pretty tricky indicator; a whole lot of information is conveyed in a stochastic chart. If you haven't done so, it would be most educational to take one duration stochastic at a time and apply it to a large number of charts representing your particular interests and noting how the indicator responds in each case. After a while, you should begin to get a feel for what the charts are telling you. Then, you should be better equipped to weight the different period indicators to suit your fancy.

I don't know where there is a detailed writeup on Jack's work other than an entry in the TAOTN manual from our meeting in New Jersey last July.

Maybe some others on the thread will be able to point you in a more fruitful direction.

Good Luck, Bill R
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