Forum Archive Index - November 2001

[Phaedrus <Phaedrus@techemail.com>]

(Requested by Dean) The Advantage chart below plots four trend indicators :-
  Wilders DMI (Directional Movement Indicator)
  Medium-term Trendline
  30 day Exponential Moving Average
  Parabolic SAR (Stop and Reverse) 
 The interesting thing here is that all four triggered Buy signals within a day 
or so of each other. Some congruence could be expected since they are all 
trying to measure the same thing, but this high degree of correlation is not 
common with such differently derived indicators. What I particularly like is 
the way the DMI kept you out of this stock for month after month as it 
continued to fall. Oscillators would have given a string of buy signals during 
this time, most leading to losing trades.
 The short-term outlook for ADV is negative. Look at the second-to-last 
candle.(Yesterday) This is a Bearish Engulfing pattern, where selling pressure 
completely overwhelms all buying pressure. These are a major reversal pattern. 
Note also the long upper shadow - prices opened at a high, went even higher, 
and then were driven back by heavy selling pressure, to close at the low of the 
day, much lower than the previous days low. Today (so far) there is another 
similar long upper shadow. To avoid clutter, I have not put volume bars on this 
chart, but it is obvious that volumes are especially heavy on down days. There 
are a lot of weak holders of this stock.
                      Phaedrus.

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