Forum Archive Index - February 2001

["Ian Rawnsley" <ianr@ie3.co.nz>]

Title:

The Stochastic indicator relates the closing price to the range in prices for a prior period of time.  George Lane, who developed this indicator, determined that 21 days is the optimum period of time for the price range. Hence, the indicator is usually referred to as the 21-day Stochastic.

For example, a 21-Day Stochastic relates the closing price to the price range from the prior 21-day period.  The 21-day price range is the difference between the highest value in the last 21 days and the lowest value.  The indicator, expressed as a percentage, is charted on a scale of 0 to 100.

Above 80% indicates an overbought condition, and below 20% indicates an oversold condition.  A sell signal is generated when this indicator drops below 80%, and a buy signal is evident when its value moves above 20%.  The upper horizontal line on the 21-Day Stochastic chart represents 80%.  The lower horizontal line represents 20%.

Instead of using 21 days, you can experiment and use a different number of days. With a shorter time-frame, you can get "whipsawed" and with a longer time frame you tend to miss the tops which are much shorter-lived and more difficult to locate than the bottoms.


The first STANZ meeting for this year is being held at:

AUCKLAND COLLEGE OF EDUCATION

McGhie Lecture Theatre

Epsom Campus

74 Epsom Avenue, EPSOM

 

Parking Gate 3 (limited) and gate 2  (ample)

 

WHEN:       THUR FEBRUARY 22nd- 7.15 FOR 7.30 PM

This year, the theme is on Indicators. So come along, join up and increase your technical knowledge.

Ian Rawnsley

Membership Secretary, STANZ (Society of Technical Analysts of New Zealand)

-----Original Message-----
From: owner-sharechat@sharechat.co.nz
[mailto:owner-sharechat@sharechat.co.nz]On Behalf Of Faizal
Sent: Saturday, February 17, 2001 8:55 AM
To: sharechat@sharechat.co.nz
Subject: [sharechat] Re: Jargons??!


does anyone know what the following terms mean:

Stochastic,
Positive Momentum,
Positively Trending.

I think i have a vague idea of their meanings but i
would appreciate if someone could explain their
meanings in the sharemarket context.

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