Ask Vendit Off Topic Questions

[Vendit]

Sometimes I think too much information is as bad as too little

You hit the nail on the head and is why I try to keep thinks as simple as possible by use of only a select few indicators.

I wrote this on January 11th, you might enjoy it:(apologies in advance for the skewed window which is created by my chart links. You may want to copy this post into a word program for easier reading.

Re: When to sell or buy;

I use very small time frame candlestick charts to find my entry and exit targets prior to a stocks opening trade. You need to realize that both candlestick support and resistance levels (buy and sell targets) are read the same way and are just as effective in any time frame; weekly, daily, hourly, 30 minute, 15 minute, 5 minute and 1 minute. Depending on what your goals are determines which time frame you most rely on.

Let’s take a look at the $COMPX in several time frames;

Daily (3 month time frame)

Re: When to sell or buy;

I use very small time frame candlestick charts to find my entry and exit targets prior to a stocks opening trade. You need to realize that both candlestick support and resistance levels (buy and sell targets) are read the same way and are just as effective in any time frame; weekly, daily, hourly, 30 minute, 15 minute, 5 minute and 1 minute. Depending on what your goals are determines which time frame you most rely on.

Let’s take a look at the $COMPX in several time frames;

Daily (3 month time frame)
Re: When to sell or buy;

I use very small time frame candlestick charts to find my entry and exit targets prior to a stocks opening trade. You need to realize that both candlestick support and resistance levels (buy and sell targets) are read the same way and are just as effective in any time frame; weekly, daily, hourly, 30 minute, 15 minute, 5 minute and 1 minute. Depending on what your goals are determines which time frame you most rely on.

Let’s take a look at the $COMPX in several time frames;

Daily (3 month time frame)

http://www.askresearch.com/cgi-bin/chart?symbol=%24COMPX&exchange=USA&size=640x480&months=3+months&type=Candle&color=Graph+Paper&scale=Logarithmic&moving=exponential&moving1=50+day&moving2=None&moving3=None&bollinger=10+day&ind_sto=on&sto=15-5-5&wpr=12&rsi=8&ind_macd=on&macd=8-17-9&roc=16-8&mfi=13&refresh=180

30 minute (6 days time frame)>candles are consolidated vs. a 15-minute time frame

http://www.askresearch.com/cgi-bin/intraday?index=%24COMPX&intraday=symbol&symbol=%24COMPX&exchange=USA&size=640x480&frequency=30+minute&type=Candle&color=Graph+Paper&scale=Logarithmic&moving=exponential&moving1=50+minute&moving2=None&moving3=None&bollinger=20+minute&ind_sto=on&sto=15-5-5&wpr=12&rsi=8&ind_macd=on&macd=12-25-9&roc=16-8&mfi=13&refresh=180

15 minute (6 days time frame)

http://www.askresearch.com/cgi-bin/intraday?index=%24COMPX&intraday=symbol&symbol=%24COMPX&exchange=USA&size=640x480&frequency=15+minute&type=Candle&color=Graph+Paper&scale=Logarithmic&moving=exponential&moving1=50+minute&moving2=None&moving3=None&bollinger=20+minute&ind_sto=on&sto=15-5-5&wpr=12&rsi=8&ind_macd=on&macd=12-25-9&roc=16-8&mfi=13&refresh=180

5 minute (2 1/3 days time frame)

http://www.askresearch.com/cgi-bin/intraday?index=%24COMPX&intraday=symbol&symbol=%24COMPX&exchange=USA&size=640x480&frequency=5+minute&type=Candle&color=Graph+Paper&scale=Logarithmic&moving=exponential&moving1=50+minute&moving2=None&moving3=None&bollinger=20+minute&ind_sto=on&sto=15-5-5&wpr=12&rsi=8&ind_macd=on&macd=12-25-9&roc=16-8&mfi=13&refresh=180

1 minute (3 hour time frame)

http://www.askresearch.com/cgi-bin/intraday?index=%24COMPX&intraday=symbol&symbol=%24COMPX&exchange=USA&size=640x480&frequency=1+minute&type=Candle&color=Graph+Paper&scale=Logarithmic&moving=exponential&moving1=50+minute&moving2=None&moving3=None&bollinger=20+minute&ind_sto=on&sto=15-5-5&wpr=12&rsi=8&ind_macd=on&macd=12-25-9&roc=16-8&mfi=13&refresh=180

Support or resistance is found by finding a certain level in a daily time frame that have several other common candle tops or bottoms. Sometimes you have to expand your chart out to 1 or more years in order to find these common levels.
These support levels are most effectively found by use of a java chart tool.

In this 3 year chart you can see that the $COMPX is settling in an area that has many trades (trade volume) which occurred January 1999 through April of 2000. For the moment we can say that 2300 or so is lower support on the NAZDAQ.

Support or resistance is found by finding a certain level in a daily time frame that have several other common candle tops or bottoms. Sometimes you have to expand your chart out to 1 or more years in order to find these common levels.
These support levels are most effectively found by use of a java chart tool.

In this 3 year chart you can see that the $COMPX is settling in an area that has many trades (trade volume) which occurred January 1999 through April of 2000. For the moment we can say that 2300 or so is lower support on the NAZDAQ.

http://www.askresearch.com/cgi-bin/chart?symbol=%24COMPX&exchange=USA&size=640x480&months=36+months&type=Candle&color=Graph+Paper&scale=Logarithmic&moving=exponential&moving1=50+day&moving2=None&moving3=None&bollinger=10+day&ind_sto=on&sto=15-5-5&wpr=12&rsi=8&ind_macd=on&macd=8-17-9&roc=16-8&mfi=13&refresh=180

I’m looking at the candle bottoms formed in January 1999 through April 2000 in order to determine this.

As is the norm with most market sell offs and major market rebounds it is the market leaders (quality stocks) that will be the first to rebound once a bottom has been reached and afterwards the 2nd and 3rd tier stocks will follow.

The same is true of a major market run up like we saw this past 6-8 months. The market leaders were the first to fall as individual investors and institutions saw the impending decay of the tech stocks so they booked profits there first and afterwards the 2nd and 3rd tier stocks will follow.

My point being that tech giants like MSFT, AOL, CSCO, MOT and others will always “lead” the other stocks up or down. I keep a basket of these leaders on my daily stream for use as an indicator for my other tech stocks.

http://www.angelfire.com/zine/NASDAQ/medved__2_.gif

The charts in the above link are set to 1 minutes candle time frame and than skewed in order to exaggerate their 30 minutes tops and bottoms. This shows me a more glaring top or bottom once one begins to form. This is a little hard to explain unless you and I are both running the same chart set up and looking at the same indices at the same time where I could point out what I am referring to but once you see a top or bottom form in this fashion a few times you will always remember how to identify it.

Back to support a second.
Once you have identified long-term lower support you can start to zero in on smaller support and resistance levels (buy and sell targets) by use of the smaller time frames.

Next I find a 3-month daily chart is good to begin using your oscillators keeping your much longer-term support in mind. The two most important oscillators are Stochastic and MACD.

The Stochastic oscillator shows you when a stock is short term over bought and short term over sold.

The MACD 3 dimensional oscillator shows you how much momentum that a stock has built into a certain frame of time in movement up or down. Used in conjunction with a stochastic oscillator it is a confirming indicator.

If you are swing trading (I refer to it as position trading), you would pay attention mainly to the 3 month time frame and expect to enter and exit a stock while holding the stock only a few days to a week letting the indicators tell you when to buy and selling just before the indicators confirm a top.

I use 30, 15 and 5 minute charts to zero in on short term support and resistance levels to target where I should place my limit buy or limit sell orders.

I hope this helps you and does not sound too confusing in the way I presented it. You won’t find this trading method as such in any book; it is simply what I have found which works best for me.