Jack Hershey – MACD and Stochastics helpers for 123 and FTT's

[Padawan]

Quote from northchuck1:

I realize that stochs are not a red light/green light indicator.

But you can't deny that on a dominante traverse where the slow stoch is pegged, a cross back to/past the 20/80 line is a pretty good indicator that the dominant traverse is over for now.

But on non-dominant traverse, the slow stoch kinda drifts around toward the 50 line, not as strong an indicator for change.

If the fast stoch xover 50, I can see that decreasing volume indicates a non-dominant, vs. increasing volume indicating a dominant traverse. But still when to reverse ??

Just trying to find addl. clues for the dominant traverse. In my simming early winter, I was tending to have good timing on the non-dom traverse, but rotten on the change over to dominant traverse. At my ability level, I'm having a harder time finding signals of change around the RTL than the left. Find myself making lots of little gains during non-dominant, then losing on the dominant, finding myself on the wrong side of the market. I know a couple of other posters have had the same problem, probably from diving too deep into the "rabbit hole", and not observing the forest and trees.

northchuck1, I think you're on to something. i'm going to review what you wrote and look at some charts and get back to you.

Attached is my drill for today.

 

[Padawan]

Here's my ym today. Are we supposed to do the drill on the ym also?

 

[ljyoung]

nc1,

I believe a change in sentiment refers to an A to D or D to A conversion only, as outlined in the original description of the stochastic indicator. This discussion (see attachment) might prove useful.

lj

 

[Tums]

Quote from northchuck1:

I realize that stochs are not a red light/green light indicator.

But you can't deny that on a dominante traverse where the slow stoch is pegged, a cross back to/past the 20/80 line is a pretty good indicator that the dominant traverse is over for now.

But on non-dominant traverse, the slow stoch kinda drifts around toward the 50 line, not as strong an indicator for change.

If the fast stoch xover 50, I can see that decreasing volume indicates a non-dominant, vs. increasing volume indicating a dominant traverse. But still when to reverse ??

Just trying to find addl. clues for the dominant traverse. In my simming early winter, I was tending to have good timing on the non-dom traverse, but rotten on the change over to dominant traverse. At my ability level, I'm having a harder time finding signals of change around the RTL than the left. Find myself making lots of little gains during non-dominant, then losing on the dominant, finding myself on the wrong side of the market. I know a couple of other posters have had the same problem, probably from diving too deep into the "rabbit hole", and not observing the forest and trees.

can you attach a chart?

 

[Padawan]

Quote from northchuck1:

I'm having a little trouble on one interpretation of the Stoch.

Assume we're in a dominant traverse of a down channel. The slow stoch is pinned at the bottom. Then the slow stoch starts to move up, crossing the 20 line. An indication of change, so exit, and reversal if trading SCT.

Then the fast stoch crosses the 50 line, indicating sentiment change. But I'm really in a non-dom traverse, an entry here could put me on the wrong side of the market. As the slow stoch approaches the 50 line, it then reverses and heads back down. This is followed by the fast stoch peaking (below the 80 line) and
reversing, going back below the 50 line. So I had two entries of the fast stoch crossing the 50, then reversing from the other direction. What would be my exit/reversal point based upon the stochastics indication. I really didn't ever have the slow stoch go to the other side, then cross over 80 indicating an exit/reversal, so when would I exit. Would this end up being possibly a low profit/wash trade based on the fast stochastics (reverse when fast stoch
turned and went past the 50 line in the other direction).

I haven't closely watched this in real time, but it looks like this is happening based on some of the posted charts. Trying to understand what the stochs are telling me. And wondering if I would look to the MACD for any addl. info.

Also wondering when Jack might be back to enlighten us in general on the MACD.

northchuck1, there's an example from today boxed in white that I think fits your description. This scenario is problematic for me all the time.

Thanks to some advice recently, I think looking at the context can help as Tums suggested. Following Spyder's teachings about the 20 sma (which acts as a trend line when volume is at normal levels) might provide a clue. In the highlighted example we see the 20 sma meeting our RTL as the non-dom approaches. We then see the dominant red volume return with a close below the RTL and the 20 SMA (also there's an FBO of both the RTL and the 20 SMA). Watching for areas where the RTL meets the 20 SMA with price advancing in the dominant direction on dominant volume could be one sequence we use to get back on the right side of things.

I'm sure there's more info we could get from other tools. Like you, I'm eager to learn more about the MACD in these situations. If it's unclear, I've taped MACD at the values of +/- .4 and +/- 1.

 

[Padawan]

By the way, as far as timing goes I do not know exactly when to reverse. It looks like 50 crosses back to back will require washes a lot of the time.

Can someone explain "the shadow" of the STOCH a little more? Another area of difficulty for me is seeing the fast STOCH flapping back and forth on both sides of the 50 line on some bars. How do we deal with that? Thanks!

 

[ljyoung]

Quote from Padawan:

By the way, as far as timing goes I do not know exactly when to reverse. It looks like 50 crosses back to back will require washes a lot of the time.

Can someone explain "the shadow" of the STOCH a little more? Another area of difficulty for me is seeing the fast STOCH flapping back and forth on both sides of the 50 line on some bars. How do we deal with that? Thanks!

Here are the formulae for the Fast, Slow and Full stochs courtesy of stockcharts.com. The "shadow" is the H -L thingy. Again, stochs are, for some, an adjunct to JHT. If you don't completely understand PV/Jokari, you will get slaughtered just using stochs.

lj

 

[Padawan]

Quote from ljyoung:

Here are the formulae for the Fast, Slow and Full stochs courtesy of stockcharts.com. The "shadow" is the H -L thingy. Again, stochs are, for some, an adjunct to JHT. If you don't completely understand PV/Jokari, you will get slaughtered just using stochs.

lj

Thanks! And absolutely. The goal is to integrate it all into KISS. This is something to take along with me tonight as reading material because things can get dull. lol

 

[northchuck1]

I guess the 20 sma, FBO of the RTL, and increasing red volume give you a clue it's time to reverse. The stochs just help with the anticipation.

I've also been going through the older Hershey stoch thread. Pretty informative. With the MACD at .4, you're obviously in a low volatility situation. And I think I've finally got the iceberg idea down. Got example of that between the 9:30 and 10:30 bars.

 

[Tums]

Quote from Padawan:

By the way, as far as timing goes I do not know exactly when to reverse. It looks like 50 crosses back to back will require washes a lot of the time.

Can someone explain "the shadow" of the STOCH a little more? Another area of difficulty for me is seeing the fast STOCH flapping back and forth on both sides of the 50 line on some bars. How do we deal with that? Thanks!

wait for the bar to close !