Afraid to Trade Blog - Latest Comments in Top Ten Stocks Extended Beyond their Moving Average

Re: Top Ten Stocks Extended Beyond their Moving Average

Corey Rosenbloom — Mon, 04 Aug 2008 23:06:09 -0000

Terry,

Thank you for your comment and support.

I am not familiar with Renko charts so I cannot be of assistance there. I use candle charts and measure swing highs and lows, as well as moving average orientation, to determine trend.

Overbought/sold indicators fail and are essentially useless in 'run-away' or grossly extended trends - what is overbought (as in RSI or stochastic) will continue to get more overbought in a dramatic trend, so these aren't as valuable.

Often, price leads fundamentals, such as the price will bottom (or reverse) ahead of fundamentals (or news) and also emotion/psychology can drive prices well beyond rational fundamental valuation.

How you trade overextended stocks is your preference, and I recommend finding a strategy and deploying it consistently, whatever it is you choose (fade strength or to go with strength).

Re: Top Ten Stocks Extended Beyond their Moving Average

Corey Rosenbloom — Mon, 04 Aug 2008 23:03:19 -0000

Thomas,

The simple code I programmed is the following:

input:
length( 20 );

Value1 = ((close - average( close, length))/(average( close, length))) ;
Plot1( Value1, "Plot1" ) ;

Thanks!

Re: Top Ten Stocks Extended Beyond their Moving Average

thomas — Sun, 03 Aug 2008 10:34:46 -0000

How did you calculate the % from MA in TradeStation?

Re: Top Ten Stocks Extended Beyond their Moving Average

Terry — Sun, 03 Aug 2008 03:28:11 -0000

Hi Corey, thank you for an excellent blog to help other people. For cases like BAC during these times, are RENKO charts reliable to tell us trends or directions? Or do we rely on overbought/oversold ? or fundamentals and stay away from banks?