This is one of the better strategies that we have tested and interestingly it is one of the few that incorporates volume.
The On Balance Volume (OBV) indicator is calculated by adding volume to the previous total if the price closes higher, and subtracting volume if the price closes lower. So an up day results in OBV being higher, while a down day results in OBV being lower. On days where the close is the same as the previous close OBV is zero.
Click here to watch the full tutorial.
Click here to download the PDF guide.
By Jeff Cartridge,
Education Manager
Trading Strategies
charting, obv, on balance volume, technical analysis, technical indicator, Trading Strategies
Strategy Overview
Bollinger Bands were created by John Bollinger in the late 1980s to provide a reference for high and low points based on volatility.
The centre line of the bands is typically a 20 day simple moving average of the price showing the intermediate trend. The two bands are then plotted around this centre line by adding (top band) or subtracting (lower band) the standard deviation from the average. They are usually plotted as 2 standard deviations from the centre line.
Click here to watch the full tutorial.
Click here to download the PDF guide.
By Jeff Cartridge,
Education Manager
Trading Strategies
bollinger bands, charting, investing, technical analysis, Trading Strategy
Dear Members,
I have updated MDS Radio with a new recording covering the Dow, XJO and the ASX Top 20.
Click here to watch the presentation.
Best Regards,
Leon Hinde.
Special Reports
ASX Top 20, charting, Dow Jones, market analysis, technical analysis, XJO
Developed by Donald Lambert, the Commodity Channel Index (CCI) was designed to identify cyclical turns in commodities but can be applied to shares as well.
The Commodity Channel Index uses a typical price in its calculation which is an average of the high, low and close for the day. A moving average of this price is then calculated and the deviation of the typical price from the moving average is also calculated.
Click here to watch the full tutorial.
Click here to download the PDF guide.
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Trading Strategies
CCI, charting, commodity channel index, stock market indicators, technical analysis, Trading Strategies
Dear Members,
I have updated MDS Radio with a new recording covering the Dow, XJO and the ASX Top 20.
Click here to watch the presentation.
Best Regards,
Leon Hinde.
Special Reports
ASX Top 20, charting, Dow Jones, market analysis, technical analysis, XJO
Dear Members,
I have updated MDS Radio with a new recording covering the Dow, XJO and the ASX Top 20.
Click here to watch the presentation.
Best Regards,
Leon Hinde.
Special Reports
ASX Top 20, charting, Dow Jones, market analysis, technical analysis, XJO
The Money Flow Index can be used as the basis of a successful trading strategy.
Strategy Overview:
The Money Flow Index includes both price and volume in its calculation. If the average price for the day is higher than yesterday then the Money Flow is positive and added to the indicator, while if the average price is lower than yesterday the Money Flow is negative and subtracted from the indicator.
The exact calculation of the Money Flow Index is very similar to the calculation of the relative Strength Index (RSI) with volume included. The Money Flow Index will fluctuate between 0 and 100, but will never reach the extreme levels.
Click here to watch the full tutorial.
Click here to download the PDF.
Trading Strategies
buying shares, charting, investing, money flow index, technical analysis, trading, Trading Strategies
The great bear market rally we have experienced since early March gives us a great opportunity to take time to reflect upon our investment strategy going forward.
The ASX 200 has been in a downward spiral since mid 2007 (as shown on this monthly chart). I have drawn the Fibonacci retracement levels on the right hand side of the chart, to illustrate key levels that will offer resistance on any move up.
Figure: ASX 200 2003 to 2009 Monthly Chart
Drilling down to the weekly chart you can see the decline in the ASX 200 bottomed around 3120 representing an over 80% retracement from the bull market run from the 2003 trough to the 2007 peak.
Figure: ASX 200 2007 to 2009 Weekly Chart
The market is currently running into resistance around the 3800 level and we would want to see a weekly close above 3850 to confirm a turnaround in market sentiment. My view is that we are experiencing a bear market rally, which typically results in an around 20% recovery and generally lasts anywhere up to 45 days.
Drilling down to the daily chart you can see that an upward trending channel has developed since early March. The market is running in resistance and the key levels to the upside are 3800 then 4000. A close below 3600 would signal the bears are assuming control and the tipping point to trigger a trade to the short side would be a close below 3550. Should this tipping point be broken we would expect a pullback towards 3400 and if that level is broken a retest of the recent low is likely.
Figure: ASX 200 2009 Year to Date Daily Chart
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Keys factors likely to impact on market direction in the near term:
- US companies are starting to report their quarterly earnings. This began this week and continues in earnest next week. The focus will be on the forecast earnings.
- International Monetary Fund (IMF) is expected to report that there is $US4 trillion of toxic debt (on 20th April). This must be unwound at some point.
- RBA cut interest rates on April 7 by 25 bps to 3%, however Australian banks are unwilling to fully pass this on to their customers. This indicates that credit and debt funding is still hard to access and the credit crisis is still impacting on the Australian economy and companies.
- G-20 headlined last week that they would back a massive $US1 trillion global bailout package. However the devil is in the detail (as the Obama Administration found with the TARP package). Asset quality and debt levels are not equal among different counter parties.
Call to Action
- Only trade liquid stocks. A buyer’s drought can play havoc with your bottom line.
- Only trade stocks with solid balance sheets and positive earnings prospects.
- Take profits as they arise.
- Do not allow your profits from the recent run to evaporate.
- Reduce exposure to more risky assets. Debt and credit quality are key issues.
- Credit will remain tight for the foreseeable future.
- Rebalance your portfolio: only include upwardly trending stocks in long portfolios.
- Consider balancing your portfolio with Long and Short positions.
- Actively manage your portfolio, by introducing option strategies into your portfolio (or simply buy some put protection for your positions).
The bear market rally we have experienced in the past month has been great, but do not get complacent and take this opportunity to replace and protect your portfolio. Our MDS Financial Research report will inform you when it is time to trade.
By Michael Hevern
What's Hot
asx 200, bear market, charting, fibonacci, investment strategy, reserve bank, techical analysis
The Donchian Channel Breakout is a strategy made famous by the Turtle Traders, who made their millions trading commodities in the 1980s.
In this tutorial we’ll look at how the Donchian Channel Breakout works, how to build the strategy and test its effectiveness, and how to use the Market Analyser to find signals on a daily basis.
Click here to watch the tutorial.
Click here to download the PDF.
Overview: A Donchian Channel is created by determining the highest and lowest point in the last X number of days. The highest point during the last X number of days marks the top of the channel and the lowest point marks the bottom of the channel. A long entry signal is given when the price breaks out to the upside and a short entry signal is given when a price breaks to the downside.
In the Engine Room, Trading Strategies
charting, donchian channel, donchian channel breakout, entry signals, how to trade, Market Analyser, technical analysis, Trading Strategies
Dear Members,
I have updated MDS Radio with a new recording covering the Dow, XJO and the ASX Top 20.
Click here to watch the presentation.
Best Regards,
Leon Hinde.
Special Reports
asx stocks, ASX Top 20, charting, market analysis, technical analysis