I posted this a few weeks back on the House of Pinchers board, but I wanted to get some additional feedback and thoughts here. Plus it is a slow day and a good time to talk technicals.
I was playing around with overlaying various indicators and found one that seems to be a very good indicator of a bottom. I have been overlaying the ChiOsc (3,10) with Keltner Bands. I use it in conjunction with the Trix (3,3) crossover. I am getting pretty consistent positive backtests when I look for a Trix (3,3) cross and the ChiOsc coming off a bottom somewhere below the lower KELT band. The ChiOsc uptick from a position below the lower KELT band seems to be a good indication that a bottom was set.
The explanation is as follows: The Keltner Bands show the average high, low and closing price of a stock as a moving average. However, most people consider KELT bands to give poor buy signals by themselves so I wanted to find something that gave a bit more fidelity. Since the Chaikin Oscillator compares moneyflow into and out of a stock with the movement of the stocks price I thought that both together would give a trigger as to when buyers started to re-enter a stock and at the same time that buying power puts upward pressure on the pps. It looks like it only works for stocks that are at or near a bottom so I thought it was perfect as a pincher indicator. I am not sure if that is clear or not, but that was my thinking.
I should add that stocks can still have a bottom set in without this setup, but that when it does occur in relation to other pincher indicators it is a good tool. It is not something that can be used alone though.
