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Position Stock Indicators

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Topics
  • Function of positioning indicators
  • 1 Day Price Change
  • Short Term Direction
  • Overbought/sold
  • 1 Month Trend
  • Intermediate Trend
Disclaimer: This is NOT investment advice, just general help and opinions, please check with a registered investment advisor before making any investment decisions. This document may contain errors. Chapman Advisory Group LLC employees are not investment advisors. Please review:
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Function of positioning stock indicators
Position Stock Indicators
  • Provide information on a stocks recent rallies and pullbacks.
  • Information on whether a top or bottom is going to form.
  • Provide odds of a stock remaining at overbought or oversold levels.
1 Day Price Change
  • A very short term stock indicator which describes how much a stock has moved up or down from yesterdays close.
  • The current stock price move is compared to past price movements and varies from 0-2 for flat, up to 9-10 for an excessive 1 day up or down price change.
  •  An excessive single day price move or gap up or 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.
  •  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.
  •  A good up reading (4+) when the overall market is down may be a sign of strength. This could provide a screening indicator.
    Stock chart excessive 1 day change
    Stock chart of an excessive 1 day price change
Short Term Direction
  • A short term indicator which captures stock 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 readings.
  •   An excessive rally or pullback (level 9-10) is rare and may not continue over the short term and may be used as a trigger to tighten stop limits, take long profits or add short positions.
  •  When used in the stock portfolio sector listing, one can judge a whether the whole sector has completed a strong rally or pullback.
  •  Stocks with extreme pullbacks that are also very oversold typically take longer to turn around (than a standard pullback), but on the other hand extreme rallies can turn very quickly on some bearish confirmation (resistance forming and bearish 3 day chart, etc..).
  •  Large opening gaps up (or down) may not get filled (price may not return through the gap) for some time.
  •  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 stock chart, at support, 1 day money flow action etc... for pullbacks.) before going long.
    Stock chart of extreme rally
    Stock chart of an extreme short term direction rally
Overbought/sold
  • A medium term indicator which captures 1-3 month long stock uptrend or downtrend rallies or pullbacks and signals whether it is overbought (on a rally/uptrend) or oversold (on a pullback/downtrend).
  • Month long rallies or pullbacks can cause extreme overbought or oversold readings in the 9-10 range.
  •  Month long rallies may be overbought but may still go higher via a stock 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)
  •  Long pullbacks (1-3 months in duration) 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 area may take twice as long (up to 2-3 months).
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 stock trend, up to 9-10 for an excessive price trend.
  •  Excessive price trends (up or down) registering in the 9-10 range rarely continue for another month.
  •  A flat 1 Month Trend may be used to signal an intermediate term stock top or bottom (multi month).
  •  A breakout (from a top) may confirm a continuation of the uptrend. A stock breakdown (from a bottom) may confirm a continuation of the downtrend.
Intermediate Trend
  • A longer term indicator which looks at the latest 4 month stock trend.
  • Generalizes:
    • Extreme rallies and pullbacks
    • Possible tops or bottoms
    • The start or continuation of an intermediate rally or pullback
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