Technical Indicators
that Really Work
TECHNICAL INDICATORS
Technical indicators have become more
important than Fundamentals. With the
proper use of technical indicators investors
are able to determine what stocks to buy or
sell and when. The most important aspect of
technical indicators are the PARAMETERS.
Technical Indicators
Support Levels Resistance Levels
Moving Averages Bollinger Bands
Linear Regression Lines MACD
Volume Bars Balance of Power *
Stochastics Price Rate of Change
Time Segmented Volume * Relative Strength
Money Stream * Wilders RSI
* Leading Indicators
VOLUME
It is very important to remember that volume goes with the trend. This
means it is normal for volume to increase along with prices and to decrease as
prices decline.
When volume is going with the trend i.e.. moving in the direction of the price
it is telling us one thing and one thing only, the prevailing trend is healthy as
far as this relationship is concerned.
When prices are declining, it is normal for volume to decline as well . This
means downside breakouts from price patterns often occur with relatively
low volume.
If volume expands as prices decline, this emphasizes the bearishness of the
breakout, since it represents greater enthusiasm of sellers.
As with all upside breakouts, volume is key. It must expand on the breakout
to indicate enthusiasm and therefore a change in the supply and demand in
favor of demand.
UPWARD TREND
VOLUME BREAK OUT
MOVING AVERAGES
A moving average is the sum of whatever
you are examining (closing prices of a
stock) for a number of days (20, 30, 50,
100, or 200) then divided by the total
number of days.
Example
$56.06 + $59.31 + $56 + $55.56 + $56 + $57 and $56.26 = $393.93
Now divide $393.93 by 7 (total number of days) = $56.27 average price.
SIMPLE vs. EXPONENTIAL
Simple Moving Average: Less of a reaction
allowing for a slower and more affective signal.
Exponential Moving Average: More reactive
causing a faster and less affective signal.
Different time frames are used during different
market conditions. The shorter the moving
average the faster the movement will be.
BUY and SELL POINTS
VOLUME with a M.A.
Often you ll find that investors will add a
moving average to the volume to alert them
when the volume has increased above its
daily average. This can be an early sign of a
positive or negative break out. The moving
average time frame varies with each
investors objectives and the market
conditions.
Volume with Moving Average
BALANCE of POWER
Balance of Power is commonly referred to
as BOP. BOP tells us whether the
underlying action in the trading of a stock is
characterized by systematic buying
(accumulation) or systematic selling
(distribution). It s plotted above or below its
zero line.
ZERO LINE
POSITIVE BOP
BULLISH VOLUME & BOP
BEARISH VOLUME & BOP
BOP DIVERGENCE
M.A. S COME TOGETHER
A tight grouping of three moving averages
is an indication that the stock price will
soon make a major move either up or down.
The value of other technical indicators play
a major role in determining the direction of
the break out.
BULLISH GROUPING
BEARISH GROUPING
MACD
MACD is very similar to the price moving
averages except that it uses 3 exponential
moving averages instead of one or two.
1. Shorter time frame (8-16 days)
2. Longer than the first time frame (18-24 days)
3. Period 5-21 days
MACD PLOTTED as LINES
MACD PLOTTED as HISTOGRAM
PRICE RATE of CHANGE
If you apply a 21-day rate of change to the
price of a particular stock, the oscillator is
calculated by simply dividing the current
day's closing price by the closing price
twenty-one days ago. The strongest PRC is
when both the price and PRC cross above
the 50% level (bullish) or below the 50%
level (bearish).
ADVANCE WARNING
SHORTING with P.R.C.
TIME SEGMENTED VOLUME
Time segmented volume is commonly
known as TSV. TSV is referred to as a
leading indicator because its movement is
based on both the stocks price and volume.
Ideal entry and exit points are commonly
found as the stock moves across the 50%
line.
BULLISH SIGNAL
BEARISH SIGNAL
WILDER S RSI
Wilder s RSI is a very commonly used
lagging indicator. When used with Time
Segmented Volume (TSV) and the right
parameters it becomes a very powerful
indicator. The combination of a lagging
indicator (Wilder s RSI-14) and a leading
indicator (Time Segmented Volume-18)
helps identify a better entry and exit point.
WILDER S RSI
TIME SEGMENTED VOLUME
RSI  TSV
STOCK SCANS
Stock scans are similar to a prized family
recipe. You add a select amount of certain
ingredients (technicals and parameters) to
create the perfect recipe. Stock scans can be
created for all market conditions giving
investors the ability to select good strong
investments for all market conditions.
BULLISH SCAN (before)
BULLISH SCAN (after)
BEARISH SCAN (before)
12 Trading Days Later
BEARISH SCAN (after)
KEY TO TECHNICALS
1. Use technical indicators that work with your
trading style (short-mid-long term).
2. Change the parameters when the markets change
(bullish or bearish).
3. Utilize GOOD stock scans with your most
rewarding technical indicators.
4. Back test your beliefs to increase your
confidence (minimum of 6 months).
BOOK SIGNING
Friday 5:00 p.m.
MONTHLY CD CLUB
Being a member of the monthly CD club is an exciting way to receive information
on a monthly basis on several different Stock Market topics, such as:
STOCK PICKING SCANS
INVESTMENT STRATEGIES
TECHNICAL INDICATORS
INTERVIEWS WITH SUCCESSFUL TRADERS
AND MUCH MORE!
Monthly memberships include (1) audio/video CD:
$ 19.95
. . . PLUS . . .
As an added bonus, you will also receive weekly information and stock picks.
PLEASE PRINT CLEARLY
Name:
Title: Company:
Address:
City: State: Zip:
Phone: ( ) Email:
Type of payment:
VISA Exp. Date:
MC Exp. Date:
If you would like to be a member please fill out the form and fax to: [phone]
You may also order online by visiting www.bullandbearoptions.com
Rolling Along Investments, Inc
5325 Elkhorn Blvd. Ste. 320
Sacramento, CA 95842
Tel: [phone]
WWW.SERENETRADER.COM
Return this form to me during my technical presentation on
Friday @ 2:30 p.m. and I ll give a 30-day subscription to our
daily news letter. Each day you ll receive updated stock market
information along with our professional selected trades. No one
offers a better newsletter then serenetrader.com
Name:
Street address:
City:
State: Zip Code:
E-mail address:
PLEASE PRINT CLEARLY