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Strategies & Market Trends : Stochastics

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To: R. Gordon who wrote (172)	2/17/1998 9:00:00 AM
From: Wayners	Read Replies (3) of 927

Here's my data for ORCL at close on 2/13/98: 5 Day Slow Stochastic: 55.3689 Upper Band (12 day period) On Slow Stochastics: 96.2266 Lower Band (12 day period) on Slow Stochastics: 57.166 Middle Band (12 day period) on Slow Stochastics: 76.6963 12 Day Moving Average On Price: 26.7022 and steeply up from 27 Jan 98 to 2/13/98 Upper Band on Price (12 day period): 29.0362 Lower Band on Price (12 day period): 21.8756 If I was using a 5 day moving average or less, yes I'd consider ORCL to be on a downtrend. I think that while we both have a 3 to 5 day timeframe (that's why I use the 5 day stochastic), I use a longer period moving average, the 12 day as a longer "insurance policy" in case the trade goes against me. After 12 days I'm ready to get out at a loss--like a time stop. I'm suggesting a buy on the current "dip" and riding the upward 12 day trend. The thing I like most about plotting12 day bollinger bands around slow stochastics is it takes into account the current trend of the stock price. I know that 5 day stochastics aren't likely to go much lower than the lower band at 57. That's why I expect the price to go up. I'd say buy here while the slow stochastic is at the lower band OR wait for the slow stochastic to hook up to about 66 or 67 from the current 55 level. My other indicator, bollinger bands drawn around bollinger band width (thats the width of the bollinger bands drawn around price and NOT the width of the bollinger bands drawn around the 5 day stochastics) tell me that the bollinger bands on price aren't likely to get any narrower--meaning an imminent price move. Clear as mud? I can post the formulas for these things I created in Wow.

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