Position Stock Indicators
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: https://www.stockconsultant.com/disclaimerpage.html
Function of positioning stock indicators
- Function of positioning indicators
- 1 Day Price Change
- Short Term Direction
- 1 Month Trend
- Intermediate Trend
1 Day Price Change
- 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.
Short Term Direction
- 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 of an excessive 1 day price change
- 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 an extreme short term direction rally
1 Month Trend
- 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).
- 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.
Back to help topics
- A longer term indicator which looks at the latest 4 month stock trend.
- Extreme rallies and pullbacks
- Possible tops or bottoms
- The start or continuation of an intermediate rally or pullback