Hi Mario,
COHR
Season greetings to all the lurkers and fellow forum regulars! I
adjusted the BB to 50 days for COHr in order to get a cleaner pattern
as possible. That setting varies from stock to stock depending on the
trading patterns resulting from institutional buying/selling/covering.
Also, in order to create a hyperlink to the chart you need to remove
the tail end of the coding to the part that reads "RSI=8." Anything
after that is not accepted by the SI editor! Here is what it looks
like:
askresearch.com
Good questions Mario. I will try to anticipate what you are really
asking. I am ordering Bollinger's book in order to prepare a more
conclusive explanation for the WINS interactive CD project I'm
working on.
Question #1 - I think what you are asking is, "how do you know when
the stock is actually reversing, what are the clues or signs?"
First, for those just joining us. WINS describes what price movements
of a stock is doing. W=withdrawing, I=increasing, N=neutral,
S=sideshows. You and I as investors must be able to anticipate the
pivot points and take advantage of the moves by executing specific
strategies. That is, either buy stock, buy calls/puts, sell calls/puts
short the stock or a combinationn of one or more of the above.
Since, WINS is more of an art (that many readers and myself have
successfully used to obtain a 7/8 out of 10 correct prediction)
rather than a science the best answer comes from Dr. Elder's book.
In short, a price trend continues until it reaches a blowout. That
blowout is characterize by a volume increase of more than 50% in
the same direction of the price movement. So, if a stock price is
going down, it will continue to go down until the weak hands fold and
there is a panic selling where volume exceeds more than 50% of
average. At that point when the pain is great the stock will reverse.
Now, should you wait a few day? Well, I would say it won't hurt you
much and may save you some whipsaws from time to time! Some stocks
move on the dime everytime and others are not consistant. Overall
observation of the BB and RSI is what we are concentrating on because
it is generally correct. Just look at any chart for the pattern.
Question #2. Yes, COHR did hug that upper BB and it also got wider
like a rubber-band. That is, the upper band kept moving up while the
bottom moved downward. That is an increase in volatility and yes, it
generally means a higher stock price. The RSI is the key to the puzzle
because the COHR RSI had been that high in the recent pass. So, it was
withing the normal trading pattern for the stock.
The neat part is that waiting only works in your favor and without
an indicator you are investing blindly based on subjective opinions
which are usually wrong in the stock market.
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