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Underexposed - Canadian Stock Journal
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Underexposed - Canadian Stock Journal

  #301 (permalink)
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Underexposed View Post
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And finally to @deaddog....you now have my complete history....I know you love to analyze this kind of stuff. But this is NOT what my journal is for. If you are smart you will realize this and not probe me any more on the subject... you would be hijacking my journal purpose and I would be forced to put you on ignore...like I almost did a while ago....OK?

Wow. You're gonna ignore one of the few people taking interest in you.

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Wow. You're gonna ignore one of the few people taking interest in you.

I can live with it...{shrug}

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Thank you Underexposed for the great work.

I have been studying bollinger bands for a few years but with your added indicators it gives
me more insight.

I do have a question on the bollinger band width, you claim that when the macd and stochastic
are going one direction and the the bollinger moves opposite is a trigger? buy or sell, how about
when all three are running together same direction.
Thank you again

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  #304 (permalink)
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thank you for your interest...I may have not been too clear of all the signals of the three indicators so let me do it for two scenarios.

#1 - the basic start to end of a Bullish breakout

There are variations on this but this will be the basic swing play....consider the following chart for this discussion:


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When you find a situation when the bollies are steadily narrowing and the BBwith is lower than any time in the last 5-6 months....then you know three is a major movement is in the works....THAT IS ALL as far as the BBwidth is concerned. Any time after June 9...you can expect a breakout.

A Bull run will occur if the Slow Sto AND the MACD have a positive slope at the time of the breakout (triggered by the sudden positive slope of the BBWidth.

Now you look for clues as to what that direction might be...bull or bear?

It is my experience that the Slow Sto leads the way with a positive slope...and you see that in this example. The MACD generally follows...in this example it is slightly positive but that is ok...it is not a neg slope.

Now things can change but every thing up to July 7 says BULLISH (note: also just before the breakout that the price is above the 20daysma...another clue all is well)


On July 9 the breakout happens...the trigger is pulled

The rise in price is great, following the upper bollie...occassionally rising above but not so much that there is a seerious pullback.

The end-of-the-run occurs when the Slow Sto AND the macd AND the BBWidth change slope ...this would indicate the end of a swing play (there are other variations but we are talking swing play in this example)

Hints of the end coming....again Slow Sto leads the way especially when it falls below 80, followed by MACD changing slope and then the BBWidth...this occurs on July 28

So you would buy at about $2.60 and sell at about $3.60 for a gain of about $1.00/share in a couple of weeks. Of course you could have anticipated the top and made more or waited for a better signal for less.

Finally in this chart I draw your attention to what has happened now....in that circle

On the surface it looks like another bullish breakout....but is it?

the three indicators have reversed their direction....however....there was no lead up by the Slow Sto and MACD and look at how far above the upper Bollie the share price has risen...it is miles above the upper bollie....this is dangerous to paly and will pullback over the next few days.......look at the share price prior to the gapping....it was drifting strongly below the 20daySMA

This is NOT a bullish breakout (despite what pumpers may say - looks like a pump/dump to me)

#2 - the basic start to end of a Bearish breakout

This could be a shorting opportunity though I do not personally short stocks...consider the following chart


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Again....look at the BBwidth....see it down at a level where breakouts occur....but what is happening to the Slow Sto from June 23 to July 10....it is falling ...not rising...the same with the MACD... not a strong fall but it is negative...look at the share price just before the BBbreakout....it is falling below the 20daySMA....all clues to a bear run

the trigger is pulled on July 14...the Slow Sto and MACD rapidly fall and the BBWidth rises fast...the end of this run as with the Bullish run, starts with the Slow Sto...its fall stops soon after the trigger is pulled...but it does not start a rise til Aug 11....the BBwidth reverses direction on Aug 1...but the MACD continues to fall until Aug 11-12.

The end of a bearish fall occurs when ALL three indicators reverse direction

So in this short you could have started it on July 14 at about $33.00 and covered the short on Aug 12 for $27.75 for a nice gain of $5.25

NOW LOOK at what is going on now in the circle

the BBWidth is back to trigger territory...the Slow Sto is rising...the MACD looks very good... looking bullish again but is it coming tomorrow??? probably not as the Slow Sto is not rising fast yet....but definitely a good prospect to watch....doncha think???

Conclusion

I hope this clarifies two scenarios...outright bull/bear swing....what about if you consider holding through a consolidation after a bull run??? what do you look for in this chart? Is a end to a bear run a true bottom or just a rest before further bottoms?

There are many more things that this chart is useful for...then you add other charts to help confirm what you see (my indicator consensus)

ALSO...if you want to test my approach...makes sure you use the same parameters for MACD and Slow Sto as I show in these charts...this is important.

Thanks for your interest.


Last edited by Underexposed; September 2nd, 2014 at 10:05 AM.
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  #305 (permalink)
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The above post is a nice candidate for a sticky in the quick summary of this thread. Thanks.

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  #306 (permalink)
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ssimonn View Post
Thank you Underexposed for the great work.

I have been studying bollinger bands for a few years but with your added indicators it gives
me more insight.

I do have a question on the bollinger band width, you claim that when the macd and stochastic
are going one direction and the the bollinger moves opposite is a trigger? buy or sell, how about
when all three are running together same direction.
Thank you again

I hope that post clarified things for you

It is not the direction of the Bollinger band that is the trigger.....it is the distance between the upper and lower BBs that is the trigger. BBwidth is not exactly the distance between the upper and lower bollie....it is a "normalized" value depending on the 20daySMA.

that trigger is the sudden divergence of the bands and that is independent of the direction of the Bollie trend at the time....The Slow Sto and MACD slopes determine the bull/bear nature of the breakout at the trigger....If these indicators are not going in the same direction or if one of them is flatlined while the other is rising or falling...then whatever the price is doing, it will probably be a "head fake" and not a real breakout.

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Sazon View Post
The above post is a nice candidate for a sticky in the quick summary of this thread. Thanks.

yes it probably would be nice but I have no option button to edit "Quick Summary" for this thread. It may be available to the elite members only I suppose. Feel free to do it if you are able and thanks again for your feedback.

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  #308 (permalink)
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followup to with: #1 - the basic start to end of a Bullish breakout

Just a quick followup to the conclusions to #1 - the basic start to end of a Bullish breakout

you will note I said this was a false breakout for reasons given

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as you can see the pullback has occurred and the three indicators that looked bullish are now blunted.

It usually is not good to make a decision on just one up-tick

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Underexposed View Post
yes it probably would be nice but I have no option button to edit "Quick Summary" for this thread. It may be available to the elite members only I suppose. Feel free to do it if you are able and thanks again for your feedback.

I have updated the quick summary. Please let me know if you would like any additional verbage placed in there and I'd be happy to do it.

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Sazon View Post
I have updated the quick summary. Please let me know if you would like any additional verbage placed in there and I'd be happy to do it.

No I think that identifies it well calling it a Swing trade....this would save someone who is new to my journal from ploughing through all these pages to find it.

I think I will make a similar post where I describe how to identify a stock that has had a bullish or bearish breakout but there is more gas in the tank....in other words. if Bullish the stock price is still bullish but just resting before taking off again...or if it has a bearish fall...is it really over and a bottom found....or is it just resting before another fall.

If you want such a post....say so through giving this post a thank you

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