* Lowtrade: When CMF is in selling and Stoch RSI at BE IN, retail is buying and big guys selling. When CMF is buying and Stoch RSI is at BE OUT. Retail is selling and big guys buying. I think of Stoch RSI as what retail wants and CMF the bank. Customers deposit and withdraw from the bank, during conflict. http://investorshub.advfn.com/boards/read_msg.aspx?message_id=75458527 * I use both CMF 14 & 20. Lookback is smoother on the 20. * The CMF 20 is under the slow stochastic (momo) and CMF 14 under Stochastic RSI also momo. This is to give you a picture of maybe who is buying and selling. * THG post I want to keep on the thread. http://investorshub.advfn.com/boards/read_msg.aspx?message_id=129866263
Multicollinearity is a statistical term for a problem that is common in technical analysis. That is, when one unknowingly uses the same type of information more than once. Analysts need to be careful and not utilize technical indicators that reveal the same type of information. http://stockcharts.com/search/?q=Multicollinearity
How to use indicators from Lowtrade compiled from his posts. Quick & condenced for reference:
Momentum TRIX - rate-of-change of smoothed moving average momo StochRSI - overbought and oversold levels in RSI momo ROC - percent change momo Stochastic - over bought / over sold momo RSI - Average Gain / Average Loss momo WM%R - price close vs. range top /bottom momo ---------------------------------------------------------- Trend Aroon - close high /low trend DMI - price direction / ADX strength trend ATR - gap /small move - up down reversal trend Macd - +/- moving averages - direction & strength trend PPO - increasing / decreasing price trend ----------------------------------------------------------------- Volume PVO - increasing / decreasing volume volume OBV - close above vs below totals volume Acc/Dist - ave close totals volume CMF - A/D strength divided by volume = pressure volume MFI - RSI volume-weighted volume
TRIX & Aroon are trend indicators, not momo. As they are not oscilators but do present a stocks trend indication. ----------------------------------------------------------------------------------------------------------------------------------------- Momentum/ Trend indicators RSI, & MFI; are oscillators. Good for support of trend.
MFI over bought over sold; 0 to 100, 50 is zero RSI over bought over sold; o to 100, 50 is zero
The Money Flow Index (MFI) is a momentum indicator that is similar to the Relative Strength Index (RSI) in both interpretation and calculation. However, MFI is a more rigid indicator in that it is volume-weighted, and is therefore a good measure of the strength of money flowing in and out of a security In essence MFI is the volume-weighted RSI of money flow.
Volume indicators
OBV & CMF are volume indications good for pressure expected when a move starts.CMF shows pressure. 0 is zero + positive, - negative Accumulation Distribution shows pressure, bottom is zero shows increasing and decreasing. Not +/- OBV being less useful then AccumDist, AccumDist which is in turn less useful the CMF. Because AccumDist was an improvement to OBV and CMF an improvement to AccumDist.We should always put more weight on CMF.
Being in or being out vs. get in or get out: RSI and MFI
Like StochRSI, MFI shows 2 indications. Strength & overbought/oversold, because it graphs like an oscilator. It mainly relies on RSI for it's basis.
MFI uses volume with RSI to determine if more money is coming into a stock, then going out. And because the consensus is, price follows volume. You can judge entry/exit with the RSI position on the graph. MFI above 80 signals entry and below 20 exit.
While StochRSI signals Be In the stock or Be Out of the stock. MFI signals Get In or Get Out. It has a different focus then OBV, Acc/Dist, or CMF. While being in the volume group, because it uses volume in it's formula. It is mainly used for decision making, rather then support.
Like the Aroon, I disagree with where the books place this indicator. I would put it in the momo group, where you find other decision making indicators. They have the aroon in the momo group for decisions and I would place that in the trend group.
RECAP, MFI determines entry exit, or positive negative momentum. It's name and placement in the volume group is misleading. IMO
Summery Choose 3 indicators, one momentum, one trend & one volume. Your watching for trend entry, will retail support your decision and how strong to expect any move you enter, will be. My choices to fulfill these are StochRSI, DMI and CMF.
StochRSI - overbought and oversold levels in RSI indicates momentum StochRSI signals Be In the stock or Be Out of the stock.StochRSI shows 2 indications: strength & overbought/oversold, because it graphs like an oscillator.
DMI - price direction / ADX strength indicates trend ADXis non-directional; it registers trend strength whether price is trending up or down.
ADX Value Trend Strength 0-25 Absent or Weak Trend 25-50 Strong Trend 50-75 Very Strong Trend 75-100 Extremely Strong Trend
CMF - A/D strength divided by volume = pressure indicates volume CMF is a volume indication good for pressure expected when a move starts.CMF shows pressure. 0 is zero + positive, – negative
MFI - While StochRSI signals Be In the stock or Be Out of the stock. MFI signals Get In or Get Out. It has a different focus then OBV, Acc/Dist, or CMF. While being in the volume group, because it uses volume in it's formula. It is mainly used for decision making, rather then support.