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Strategies & Market Trends : Let's Talk Technical Analyisis (TA) -- Ignore unavailable to you. Want to Upgrade?

To: Chris who wrote (11)	10/18/2001 11:13:11 PM
From: TechTrader42	Read Replies (2) \| Respond to of 178

Your MACD indicator is pretty good. Can't beat that in a trending market. SAR works well, too. That's interesting what you say about range-bound thinking. When prices break out of ranges, indicators such as stochastics (or stochRSI) fail. With a ranging stock, an overbought level would precede a selloff. But stocks can also hover at overbought levels in breakouts, or oversold levels in crashes. That may be why some analysts relying on indicators such as stochastics got repeated overbought/sell signals during the latest Naz rally. If they followed their own signals, they missed the rally, and they may have run into some trouble with short-sale trades. In hindsight, they believe they called the pullback, but they missed the rally, and the early call could have been costly. Early calls usually amount to nothing more than a stopped clock being right twice a day anyway. Systems based on oscillators such as stochastics are not only inclined to miss breakouts and breakdowns, but they're prone to repeated whipsaws, as profit tests show. They don't perform well in profit tests. On the other hand, in volatile markets, the moves can be all over by the time indicators such as SAR get around to giving signals. One solution might be to combine the fastest of indicators with indicators such as SAR. Candlesticks are among the first to give signals. One could enter and exit trades based on the candlesticks, and keep an eye out for extended trends with SAR. For example, some hanging men and dojis gave the exit signals the other day, giving traders time to get out. But SAR would have carried them through most of the trend, up to that point. Monty and Don are two experts on candlesticks, btw. Most stocks are moved by the market in the present environment. I wouldn't enter trades in an individual stock when the market is moving against the trade. One perennially struggling analyst used to say that it's a market of stocks, not a stock market, but the fact is that it's a stock market. A downtrending market carries just about everything down with it. Gamblers, however, always seem to believe in the lucky bet, no matter that the house is rigged against them. They search for the lucky one-armed bandit, the lucky dealer or the lucky stock that pops up in scans. Usually, the lucky stock will plummet with all the others. So it pays to keep an eye on the indexes, with the usual indicators and with volatility indicators. And so on and so forth. I'm testing to see that all the letters work on this new keyboard. zzzzzzzz.