What comes first in a chart, Volume or Momentum?

For this discussion I am using MACD and Volume, we know what Volume is.

MACD – Basic

The most simple momentum oscillator, this indicator uses two moving average (I use them as an alternative for trend lines at times). Momentum change happens as there are consecutive breakouts or breakdowns of any trend lines. So that’s how momentum is measured.

MACD Line: (13-day EMA - 21-day EMA)

Signal Line: 8-day EMA of MACD Line

MACD Histogram: MACD Line - Signal Line

The math was simple ain’t it?

MACD – the convergence occurs when the moving averages move towards each other and the divergence occurs when the moving averages move away from each other. It is an oscillator because it oscillates above and below the zero line.

Any Momentum indicator that you like to use, either RSI or MACD can be applied in the RSI new high trick that was discussed earlier.

 

There is a difference between RSI and MACD.

MACD cannot have an upper limit, while RSI can have. Why is this important? We will discuss this using TSLA.

You can use these tricks, in conjunction with the Market or the Sectors. Make sure you are playing in the Market or Sector direction.

From the above chart, we can see what can be used for hunting the tickers. Hunting with the momentum based indicators puts in the odds of getting in early. 

GL all. Merry Christmas and Happy New Year. 

RSI (3) trading strategy

Swing Trading with the most simple strategy.

In one of my previous Tips and Tricks ( #3) I have told you guys why buying in Overbought could be profitable.

Now I am going to tell you when to buy Oversold. Treat the following as a starting point with RSI to scan for stocks.

There are two ways to apply this strategy.

1) Finding a long term Momentum direction (and / or).

                  using CCI (150 or 200) would be better.

2) Find the major trend.

                  using 200 SMA

Lets just see the most simple option first.

Step 1. This is a generalized statement observed (or used ) in the market “The long-term trend is up when a security is above its 200-day SMA and down when a security is below its 200-day SMA. Traders should look for buying opportunities when above the 200-day SMA and short-selling opportunities when below the 200-day SMA”

Step 2. Use Daily RSI(3) and find tickers trading below 15 (I like 10)  for buy and 85 (I like 90) for sell on RSI chart.

Time for a sweet example (I don't see a point in posting 100 of charts showing this, I would recommend you to go through that exercise to get a feel for the strategy).

Remember there is risk, trading whatever your strategy is, we can minimize the risk to certain level, That’s about it.

In the following chart, you can see the horizontal lines (dotted blue lines), showing signals of RSI (3) buy and trading above 200 SMA. Yes, there are about 4 bad signals, but learn to take the good ones. And get rid of the crappy ones with a stoploss as quick as possible.

For friends and Promotion stock secret members, if you are looking to fine tune this strategy send me an email.

Below is the stockcharts.com scan code  

(btw, i am not selling stockcharts, I just like it for scans)

[type = stock] and [group is not etf] 
and [today's sma(50,volume) > 100,000]
and [daily close > daily sma(200,close)]
and [RSI(3) < 15]

I have fine tuned this scan for personal use, its more complicated for a budding chartist, the goal of my blog is to keep things simple. 

GL, UCS

NURO (NeuroMetrix Inc.)

NURO (http://www.neurometrix.com/)

Finally showing strength of buyers. (Trick #3) On my continued watch for pattern breakout plays.

Note: Treat this as educational resource only. I don't personally recommend you to buy or sell this ticker, any decision you make in terms of buy and sell is totally on you. 

News :
NeuroMetrix Launches www.SENSUSRx.com

This News went live on Nov 22nd, the volume spikes earlier than news.

Week - 3 Swing Trading - Introduction to Technical Indicators

Welcome back to the Swing Trading – Week 3

Swing trading stocks begins with a hunt and the hunt goes on until you find the perfect one. There are many different ways you can hunt for stocks, using fundamentals or using technicals.  We are going to take the technical hunt, inorder to perform this hunt you need to understand every technical indicators you like to use. Lets jump right in……….

Technical indicators are broadly classified as Indicators (RSI, MACD, OBV, etc) and Overlays (SMA, EMA, KC, BB) (indicators are sometimes called as leading indicators, and overlays as lagging indicators FYI only).

Indicators can be classified as Momentum, Trend and Volume Indicators. Some Volatility Indicators are overlays on chart like the Bollinger Band.

Before we get into the details on indicators, I think it is my duty to give you the most important warnings.

·         Do not use Technical indicators as signal to Buy or Sell.

• Technical indicators measure price and/or volume “behavior”. The most newcomers often make mistake is treating them as buy or sell signals. Technical indicators are great for stock hunt, Buy and sell signals should be based on the price action.

Following table can give you a summary of all known Indicators and their functions.

Indicator		Function	Based on
ROCV	Rate of Change in Volume	Measures increase in Volume	Volume
VO	Volume Oscillator	Measures Trend in Volume	Volume
OBV	On Balance Volume	Measure the accumulation or distribution by comparing volume to price.	Closing Price and Volume
PVT	Price - Volume Trend	Measure the strength of price trends	Closing Price and Volume
-	Accumulation/Distribution	Measure the Price and Volume relative movements	Closing Price, Range and Volume
MFI	Money Flow Index	Measure the volume on green vs red days (RSI for Volume)	Closing Price, Range and Volume
CMF	Chaikin Money Flow	Measure the Price and Volume relative movements	Closing Price, Range and Volume
RSI	Relative Strength index	Strength of buyers and sellers in its current direction	Closing Price, previous closes
-	Aroon Indicator	Determines whether a stock is trending or not	High/Low
ADX	Average Directional Index	Measures the Strength of Trend	Closing Price, High/Low
TSI	True Strength Index	Smooth RSI version	EMA
-	Vortex Indicator	Identifies the start of a new trend.	High/Low
ParSar	Parabolic SAR	Measures reversal points based on High and Low price data	Closing Price, High/Low
SMA	Simple Moving Average	Measure of trend direction by smoothing price data	Closing Price
EMA	Exponential Moving Average	Measure of trend direction by smoothing price data	Closing Price
MACD	Moving Average Convergence and Divergence	Measures the distance between the two moving average lines	Moving Average
TRIX		Triple-smoothed exponential moving average of closing prices	Moving Average
CCI	Commodity Channel Index	Shows a price variation from its Moving Average.	Closing price, Moving Average
DPO	Detrended Price Oscillator	Compares closing price to a prior moving average	Closing price, Moving Average
Sto	Stochastic	Measures the Momentum based on closing price and MAs.	Closing Price, Range
-	Williams %R	Measures the Momentum based on closing price and MAs.	Closing Price, Range
-	Williams Accum/Dist	Measures Accumulation/Distribution without Volume	Closing Price, High/Low
-	Elder Ray Index	Measures buying and selling pressure in the market.	High/Low, Moving Average
ATR	Average True Range	Measures a stock's volatility	High vs Low
BB	Bollinger Band	Measures Volatility	Standard Deviation and SMA
KC	Keltner Channels	Overlay based on ATR	Average True Range, Multiplier
-	Ichimoku Cloud	Defines Support & Resistance, Trend, Momentum and Trading Signals	High/Low of various time periods
-	Pivot Points	Defines Support & Resistance	Closing Price, High/Low

You don’t need to know all the indicators in-depth. But having an in-depth knowledge on important indicators can help build a trading strategy.

For Example,

Let’s use Aroon Indicator, this indicator determines the trend, we can use this indicator to find stocks that are consolidating (can use this indicator to scan for many other trade ideas), using the following expressions on stockcharts.com

We will get in details about this indicator in later lessons.

Stockcharts advanced scan criteria.

[Daily Aroon Up(25) < 20] AND [Daily Aroon Down(25) < 20]

Using this scan, showing the 6 of 50 stocks result. 

SM	SM Energy Co.	NYSE	Energy	Exploration & Production
SSD	Simpson Mfg Co, Inc.	NYSE	Industrial	Building Materials
SYNA	Synaptics, Inc.	NASD	Technology	Computer Hardware
TKR	Timken Co.	NYSE	Industrial	Industrial Machinery
TSCO	Tractor Supply Co.	NASD	Cyclicals	Specialty Retailers
TXRH	Texas Roadhouse Inc.	NASD	Cyclicals	Restaurants & Bars

Note: I have not looked at these stocks charts yet, this is not a buy or sell recommendation.