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Strategies & Market Trends : TA Science Projects & Experimental Indicators

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To: R Stevens who wrote (210)	6/27/1998 12:40:00 PM
From: ftth	Read Replies (2) of 237

Hi RS, in the sense that the trend of the indicator lows is in opposition to the trend of the recent price lows, yes it would be a divergence. But if you change the indicator parameters, you can get different levels of confidence in the signals. I don't find any consistency and accuracy value in stochastics (Rainier and I were discussing this a while back on this thread), so I don't use them. Because of the recent activity in the broader markets over the period of the indicator settings you have chosen, I suspect you would be able to find similar stochastic divergences in hundreds if not thousands of stocks. The indicator is just confirming what we can already see in the charts. Because of that, I wouldn't use it as a confirming indicator (it's more of a YES-man at the moment, just telling you what you want to hear), and definitely wouldn't use it in isolation. Be sure to consider the potential overhead supply in the mid-17's when deciding on an entry point. Stochastics are a relative, price-only indicator, so they won't tell you this. But the congestion and volume can be seen if you look at the chart. dh

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