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***** Disclaimer: This is NOT investment advice, just general help and
Dan Chapman's opinion, please check with a registered investment
advisor before making any trades or investment decisions. This
document may contain errors.
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Topics: also see  Indicator Intro
Function of positioning indicators
| • | Provide information on a stocks recent rallies and pullbacks. |
| • | Information on whether a top/bottom is going to form. |
| • | Provide odds of stock remaining at overbought or oversold levels. |
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1 Day Price Change
| • | A very short term indicator which tells how much a stock has moved up or down from
yesterdays close. |
| • | The current move is compared to past price moves and varies from 0-2 for flat,
up to 9-10 for an extreme 1 day up or down change. |
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An excessive single day price move or gap up/down (level 9-10) is rare and may not continue for another day. A strong stock will pause or keep most of its
gains on the next day. |
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Use this indicator to help prevent chasing a stock upward (for longs) or downward (for shorts) on the day you may want to add a position. |
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A good up reading (4+) when the overall market is down may be a sign of strength. This could provide a screening indicator. |
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Short Term Direction
| • | A short term indicator which captures rallies and pullbacks from 3 days
to 3 weeks in duration. (Note: The Overbought/sold indicator is used capture longer 1-3 month rallies and pullbacks.) |
| • | The current rally or pullback is compared to past rallies or pullbacks and varies
from 0-2 for flat, up to 9-10 for extreme rallies and pullbacks. |
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An excessive rally or pullback (level 9-10) is rare and may not continue over the short term. Indicator may be used as a trigger to tighten stop limits, take long profits
or add short positions. |
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When used in the Portfolio sector listing, one can judge a whether the whole sector has
completed a strong rally or pullback. |
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Stocks with long extreme pullbacks that are very oversold typically take longer to turn around (than a standard pullback),
but on the other hand stocks with extreme rallies can turn very quickly on some bearish confirmation
(resistance forming and bearish 3 day chart, etc..).
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The market does not always act on bell curve type statistics, sometimes a strong pullback (7-8 range) continues to the extreme case,
you may want to factor in a "wait till confirmation" (i.e. bullish 3 day chart, at support, 1 day money flow action etc... for pullbacks.)
before going long on strong pullbacks.
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Rallies/Pullbacks
| • | Provides values for the typical and extreme rally and pullback in stock points and in percent(%). |
| • | The values listed (in stock points and percent) are valid for rallies or pullbacks that are just starting to develop.
A starting rally is defined as one starting from a support (a pullback from resistance) point and is not overbought or oversold (near the chart's Rallyband midpoint). |
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Good indicator for directly comparing two or more stock's potential rally or pullback percentage and possible profit. |
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Overbought/sold
| • | A medium term indicator which captures 1-3 month long uptrend or downtrend
rallies or pullbacks and signals whether a stock is overbought(on a rally/uptrend) or oversold(on a pullback/downtrend).
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| • | Continuous month long rallies or pullbacks can cause extreme overbought/sold readings in the 9-10 range.
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Month long rallies may be overbought but may still go higher via a Breakout. Keep an eye on the Breakout indicator for a possible continuation
from an overbought position (sometimes to new highs). (An oversold stock could go lower via a Breakdown)
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1-3 month long pullbacks that cause an oversold reading may take longer to turn around and rally. Sometimes expecting a short term
rally 1-3 weeks in duration from this oversold point may instead take twice as long (up to 2-3 months).
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1 Month Trend
| • | A short term indicator that examines how fast the stock price has risen or
fallen over the past month. |
| • | Values from 0-2 represent a flat month trend, up to 9-10 for an excessive price trend. |
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Excessive price trends (up or down) registering in the 9-10 range rarely continue for another month. |
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A flat 1 Month Trend may be used to signal an intermediate term top or bottom. A breakout (for a top) may confirm a continuation of the uptrend.
A Breakdown (for a bottom) may confirm a continuation of the downtrend.
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Intermediate Trend
| • | A longer term indicator which looks at the latest 4 month stock price trend. |
| • | Generalizes extreme rallies/pullbacks, possible tops/bottoms and the start or continuation of an intermediate
rally or pullback. |
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