Technical Indicators that Really Work

Size: px

Start display at page:

Download "Technical Indicators that Really Work"

Madeleine Ross
5 years ago
Views:

1 Technical Indicators that Really Work

2 TECHNICAL INDICATORS Technical indicators have become more important than Fundamentals. With the proper use of technical indicators investors are able to determine what stocks to buy or sell and when. The most important aspect of technical indicators are the PARAMETERS.

3 Technical Indicators Support Levels Resistance Levels Moving Averages Bollinger Bands Linear Regression Lines MACD Volume Bars Balance of Power * Stochastics Price Rate of Change Time Segmented Volume * Relative Strength Money Stream * Wilders RSI * Leading Indicators

4 VOLUME It is very important to remember that volume goes with the trend. This means it is normal for volume to increase along with prices and to decrease as prices decline. When volume is going with the trend i.e.. moving in the direction of the price it is telling us one thing and one thing only, the prevailing trend is healthy as far as this relationship is concerned. When prices are declining, it is normal for volume to decline as well. This means downside breakouts from price patterns often occur with relatively low volume. If volume expands as prices decline, this emphasizes the bearishness of the breakout, since it represents greater enthusiasm of sellers. As with all upside breakouts, volume is key. It must expand on the breakout to indicate enthusiasm and therefore a change in the supply and demand in favor of demand.

5 UPWARD TREND

6 VOLUME BREAK OUT

7 MOVING AVERAGES A moving average is the sum of whatever you are examining (closing prices of a stock) for a number of days (20, 30, 50, 100, or 200) then divided by the total number of days. Example $ $ $56 + $ $56 + $57 and $56.26 = $ Now divide $ by 7 (total number of days) = $56.27 average price.

8 SIMPLE vs. EXPONENTIAL Simple Moving Average: Less of a reaction allowing for a slower and more affective signal. Exponential Moving Average: More reactive causing a faster and less affective signal. Different time frames are used during different market conditions. The shorter the moving average the faster the movement will be.

9 BUY and SELL POINTS

10 VOLUME with a M.A. Often you ll find that investors will add a moving average to the volume to alert them when the volume has increased above its daily average. This can be an early sign of a positive or negative break out. The moving average time frame varies with each investors objectives and the market conditions.

11 Volume with Moving Average

12 BALANCE of POWER Balance of Power is commonly referred to as BOP. BOP tells us whether the underlying action in the trading of a stock is characterized by systematic buying (accumulation) or systematic selling (distribution). It s plotted above or below its zero line.

13 ZERO LINE

14 POSITIVE BOP

15 BULLISH VOLUME & BOP

16 BEARISH VOLUME & BOP

17 BOP DIVERGENCE

18 M.A. S COME TOGETHER A tight grouping of three moving averages is an indication that the stock price will soon make a major move either up or down. The value of other technical indicators play a major role in determining the direction of the break out.

19 BULLISH GROUPING

20 BEARISH GROUPING

21 MACD MACD is very similar to the price moving averages except that it uses 3 exponential moving averages instead of one or two. 1. Shorter time frame (8-16 days) 2. Longer than the first time frame (18-24 days) 3. Period 5-21 days

22 MACD PLOTTED as LINES

23 MACD PLOTTED as HISTOGRAM

24 PRICE RATE of CHANGE If you apply a 21-day rate of change to the price of a particular stock, the oscillator is calculated by simply dividing the current day's closing price by the closing price twenty-one days ago. The strongest PRC is when both the price and PRC cross above the 50% level (bullish) or below the 50% level (bearish).

25 ADVANCE WARNING

26 SHORTING with P.R.C.

27 TIME SEGMENTED VOLUME Time segmented volume is commonly known as TSV. TSV is referred to as a leading indicator because its movement is based on both the stocks price and volume. Ideal entry and exit points are commonly found as the stock moves across the 50% line.

28 BULLISH SIGNAL

29 BEARISH SIGNAL

30 WILDER S RSI Wilder s RSI is a very commonly used lagging indicator. When used with Time Segmented Volume (TSV) and the right parameters it becomes a very powerful indicator. The combination of a lagging indicator (Wilder s RSI-14) and a leading indicator (Time Segmented Volume-18) helps identify a better entry and exit point.

31 WILDER S RSI

32 TIME SEGMENTED VOLUME

33 RSI TSV

34 STOCK SCANS Stock scans are similar to a prized family recipe. You add a select amount of certain ingredients (technicals and parameters) to create the perfect recipe. Stock scans can be created for all market conditions giving investors the ability to select good strong investments for all market conditions.

35 BULLISH SCAN (before)

36 BULLISH SCAN (after)

37 BEARISH SCAN (before)

38 12 Trading Days Later

39 BEARISH SCAN (after)

40 KEY TO TECHNICALS 1. Use technical indicators that work with your trading style (short-mid-long term). 2. Change the parameters when the markets change (bullish or bearish). 3. Utilize GOOD stock scans with your most rewarding technical indicators. 4. Back test your beliefs to increase your confidence (minimum of 6 months).

41 BOOK SIGNING Friday 5:00 p.m.

42 MONTHLY CD CLUB Being a member of the monthly CD club is an exciting way to receive information on a monthly basis on several different Stock Market topics, such as: STOCK PICKING SCANS INVESTMENT STRATEGIES TECHNICAL INDICATORS INTERVIEWS WITH SUCCESSFUL TRADERS AND MUCH MORE! Monthly memberships include (1) audio/video CD: $ PLUS... As an added bonus, you will also receive weekly information and stock picks. PLEASE PRINT CLEARLY Name: Title: Company: Address: City: State: Zip: Phone: ( ) Type of payment: VISA Exp. Date: MC Exp. Date: If you would like to be a member please fill out the form and fax to: (916) You may also order online by visiting Rolling Along Investments, Inc 5325 Elkhorn Blvd. Ste. 320 Sacramento, CA Tel: (916)

43 Return this form to me during my technical presentation on 2:30 p.m. and I ll give a 30-day subscription to our daily news letter. Each day you ll receive updated stock market information along with our professional selected trades. No one offers a better newsletter then serenetrader.com Name: Street address: City: State: address: Zip Code: PLEASE PRINT CLEARLY

12 simple Technical Indicators

12 simple Technical Indicators That Really Work Mark Larson Marketplace Books Columbia, Maryland Copyright 2007 by Mark Larson Published by Marketplace Books Inc. All rights reserved. Reproduction or translation