Strategy Central

[Vestor_2000]

Full Stochastics

Hello again, WS. I would appreciate your assessment of my comments below, based on the 15-5-5 daily stochastics setting, if you wouldn't mind, using this chart:

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=1&mn=0&dy=0&id=p55672163311

If I understand correctly, you trade the crossovers on the FS. If this is the case, and assuming you were trading the S&P 500 (which you may not), you would sell based on Friday's close right? More importantly, we are seeing some negative-divergence between the price action and the Stochastics, which would further reinforce the sell signal.

Also, the signals do look quick, based on your comments and a casual eyeballing. What's more, the signal seems so quick that it seems to overcome the fact that the Stochastics, which usually fail in a trending market, still give good signals. Would this be an accurate statement? Or, what other things do you look at when the market is trending strongly, which may in turn minimize the effectiveness of the Stochastics?

To continue, it looks like good buy signals are given when the S&P 500 is below its 50-day EMA and the Stochastics tags about 15. Likewise, good buy signals are given when the index is above its moving average and the Stochastics touch 20. In both cases, good sell signals appear to be given either when both lines cross above 80-85 or the aforementioned crossover takes place.

I'm sure I will have a few more comments/questions as I look at this setting more, but thanks for offering it for my consideration.

Rich