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Gold/Mining/Energy : Trump's 12 Diamond Picks, Discussions Limited -- Ignore unavailable to you. Want to Upgrade?

To: Ed Pakstas who wrote (431)	1/22/1998 7:16:00 PM
From: Larry S.	Read Replies (1) \| Respond to of 2251

Ed, Someone provided the following Website on another thread and it should provide an answer to your question: e-analytics.com. I found it very helpful. Good luck. Cheers, Larry Smith

To: Ed Pakstas who wrote (431)	1/22/1998 7:17:00 PM
From: Mark Bartlett	Read Replies (2) \| Respond to of 2251

Ed, The theory behind stochastics (a momentum indicator) is .... in a rising market, prices tend to close near the high for a defined period AND in a falling market, prices tend to close near the low for a defined period. So ... stochastics trys to identify these clusters because they signal changes in the prevailing trend. As you indicated, there are two lines that are used to define these trends ... a %K (solid line)and a %D (dotted line) ... it is the movement of these two lines relative to each other that provides the signals. The %D is the more important of the two because its measure provides the major signals. Basically %D is a slowed down (smoothed out) version of %K. These lines move between 0 and 100. Generally anything past 80 with a cross over of the %K through the %D would be viewed as a sell signal. At the other end, around 20, is generally viewed as a buy area (when accompanied with the appropriate cross-over. I could give you the formulas for each of the lines, but it is not important .... the formulas are based on the high, the low, and the close for the day over a defined period. Personally, I do not use stochastics that much ... I have found with these stocks that RSI and OBV are more helpful .. as well as the 13 and 50 day SMA's. Just looking at the volume is helpful too. Anything that approaches a 200% increase in the average volume from the preceeding 2 weeks kind gets a little of my additional attention. I am not sure that this has been helpful .... "Technical Analysis Explained" by Pring or "Trading for a Living" by Elder, goes into much more detail - with lots of accompanying charts to illustrate the various situations .... a chart really is worth a thousand words <g> MB