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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Jeffrey Beckman who wrote (4526)12/5/1997 12:20:00 PM
From: Thean  Read Replies (2) of 95453
 
Jeff, my perspective on Stochastics and BB.

Stochastics is an oscilating indicator. It is also a moving average. Confirmation is always 2-3 days late. But a confirmation generally means we have bottomed. We may move sideway for a while but the downside risk is minimum. THIS IS TRUE ONLY for a sector like the drillers with long term uptrend and many short term swings - said this a dozen times and will say this again because it is an essential ground rule for the indicator to work.

BB also has element of moving average but its two bands are very helpful in setting the intraday high/low. If a stock is moving near the bottom of the band and its intraday shot below that big time, buy in if there is no news because it is an intraday panic selling. Conversely, sell if it shoots wildly above the higher band. In most cases, I have never seen an ability to sustain staying above or below the bands more than two days. Another usefulness of BB is the catching the wave phenomenon. If a trend is broken and price moves to the lower band, there is a strong chance it will ride the lower band down to lower low. Detachment away from this trend is an early sign of possible support coming. The converse is true for the upper band. That is why selling while a stock rides the upper band is susceptible to selling-too-early. When one couples Stochastics and BB, then it becomes a powerful one-two punch. I use them to beat the drillers. There are others on this board who can also testify to the usefulness of these indicators.
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