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EWZuber
1,373 posts
msg #31929
Ignore EWZuber
4/29/2004 2:47:39 PM

NASDAQ tested the Supporting TL at 1992 as resistance and confirmed. It dropped precipitously from there and now is testing the Supporting TL at 1958. It broke through and will have to see where it closes this session.
Sim. puts are kicking butt. Up another 40% & 62 % today.


EWZuber
1,373 posts
msg #31931
Ignore EWZuber
4/29/2004 7:14:56 PM

Sim QQQ puts closed todays session
May 36 @ +122%
May 35 @ +140%.

I can see one clear advantage to trading index options, it seems to reduce the complexity of the trade. When trading any stock, the vast majority will be affected by the movement of the associated index(s).
Say trading AMCC, one needs to be aware of the SOX and the .COMP stochastic phase relationships ( or other technicals ) along with the stochastics for AMCC.
I have found that the odds are less than optimum if you try to trade a stock if its accumulation phase is lagging the accumulation phase of its index.
I have found this to be true as evidenced by backtesting screens and in actual trading.
I found that a screen that looks for stocks that are oversold in both Weekly and daily charts returns the highest gains when the picks are timed to coincide with the short 1 to 3 day window where the associated index moves into accumulation. Backtesting shows that picking screen returns outside of this window results in seriously reduced performance.
The best and hottest stocks in any sector are up and running at the first hint of accumulation in the associated index. The laggards are dragged along by the bullish sentiment of their peers and often lag far enough behind that by the time the index is becoming overbought the stock is just starting to show small gains.
When the index goes into distribution the stock goes down with it cutting the accumulation phase short for the stock. Consequently the gains in the stock were minimal.
To optimize returns the entry needs to be timed as close as possible to the first bullish technical moves in the index.

With options on Indexs or tracking stocks its not necessary to deal with multiple technical pictures. It also allows for a very personal relationship with the index, trading the same chart over a period of years.
Downside is that options can be a much higher risk if you're wrong. JMHO


EWZuber
1,373 posts
msg #31939
Ignore EWZuber
4/30/2004 12:30:49 PM

NASDAQ about to test support around the 10 Month MA. at 1930.
With the .COMP oversold on daily charts we may see a small oversold bounce but I suspect this is not the near term bottom as the Weekly Chart cycle is solidly in a distribution phase and still has a ways to go.
JMHO


EWZuber
1,373 posts
msg #31943
Ignore EWZuber
4/30/2004 5:18:08 PM

NASDAQ broke through support at 1930 dropping like a rock, stopped at 1919 to turn and test 1930 as resistance ( easiest to see on the 5 min. chart ) then retest 1919 as short term support. Good support at about 1900 where we have the 50 WK.MA and a little price support from the cycle low formed on 3/22 ~ 3/24.
My sim. puts were both in the money as the QQQ broke below 35 today and closed them both for about 190% return each. The Convergent Stochastic Theory was instrumental in being able to predict this precipitous drop in the post of 4/26.
Just signed up for a 11 Week options course on line.


roca1018
37 posts
msg #31945
Ignore roca1018
5/1/2004 6:46:58 AM

EwZuber,

Could you elaborate on the convergent stochastic entry and exit points? Also, are you familiar with any scans for stocks under accumulation where on balance
volume is increasing while price is decreasing?

Thanks,

Rich


txtrapper
548 posts
msg #31948
Ignore txtrapper
5/1/2004 8:52:36 AM

Members;

Convergent Stochastic Theory

A Yahoo and Google search for "Convergent Stochastic Theory" produced no results. How does one begin to study this unpublished theory?

Webster's
Entry Word: theory
Function: noun
Text: 1 a belief, policy, or procedure proposed or followed as the basis of action <an educational system that was based on the theory that men learn best by experience>


TxTrapper



EWZuber
1,373 posts
msg #31958
Ignore EWZuber
5/2/2004 10:55:42 PM

roca1018
There is a convergence of events for both the entry and exit signals.
For an entry it is imparitive that the Monthly and Weekly Charts be in accumulation or has just had a stochastic fast line cross above the slow line indicating the beginning of an accumulation phase.
( The only exception I have found is immediately following a fast line cross below the slow line on Monthly chart. There is usually enough momentum left in the chart for a couple more 'long' trades but risk is increased ).
Daily charts need to show a convergence of the fast and slow lines, along with Hourly and 5 Minute charts. It's good to see volume studies either show capitulation or a complete exhaustion of sellers.
The Resistance Trendline will break right about where the stochastic fast line crosses above the slow line. Buying volume should follow almost immediately.

A Supporting Trendline is drawn from the new uptrend. If this TL is broken draw a horizontal line to the right of this Supporting TL break, this is the primary sell signal. The only possible exception to this rule is when all longer term Stochastic cycles are in strong accumulation and a short term cycle like the 5 min. or 1 HR. chart cycle is already heavily oversold. If the Supporting TL is broken under these conditions on a closing basis ( for the next candlestick in that time frame ) and there is other support like an intraday moving average or other technical pattern very near then it can be worthwhile to wait a bit to see if the stock holds at this MA support and moves back into accumulation soon.
If one has no restrictions on trades and one dooes not mind active trading to manage a position then there is no real need to hold when it drops below the horizontal line.
This can be used for finding long or short positions.

I'm trying to find out what is needed to put up a website so that charts can be posted. A picture is worth a thousand words.


EWZuber
1,373 posts
msg #31959
Ignore EWZuber
5/2/2004 11:29:55 PM

txtrapper
You're right. It has never been published in a commercial format. The Convergent Stochastic Theory is my own system. It is a product of my background as a electronics technician where I dealt heavily in waveforms, frequencies and their phase relationships. I was amazed to find that these laws of physics could be applied to stock charts.
Adding in Trendlines and volume studies completed the system.

Now that I have a new hard drive and Microsoft Word I have started to write a book on the subject complete with annotated charts.

For anyone interested a search here on SF should yield a thorough discussion of the subject.


txtrapper
548 posts
msg #31960
Ignore txtrapper
5/3/2004 9:11:34 AM

Thanks roca and zuber;

Using the theory, then VION and DNYY could be watch candidates, correct?


TxTrapper


txtrapper
548 posts
msg #31961
Ignore txtrapper
5/3/2004 9:36:47 AM

roca and zuber;

roca;

Would you please email me a chart "showing" the resistance and supporting trendlines you describe in your post above.

txtrapper@sbcglobal.net

thanks, roca and zuber

I see on my above post that both stocks do not qualify on a 3m/d charts since stochastics are not diverging, however DNYY is showing divergence on a 3m/d chart using Stochastic Fast (5,3), to detect the daily divergence are you using the 1 year or 3 month chart, and what settings for Stochastics?


TxTrapper




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