Wednesday, November 05, 2008

GE / NYAD Signal Setups

Here are a couple more ideas for watching GE (and other securities) in conjunction with the NYAD (NYSE advance/decline line).
Orange lines are slope of GE and NYAD for 30 minutes.
Blue lines are 60 minute extensions of the orange, unless a reversal.
Pink lines are mirror of NYAD slope onto GE price range.
White circles indicate reversals in GE upward slope, accompanied by parabolic sell signals (per yesterday's post).
The low risk trade develops when the 30 minute slope of the NYAD and its projection diverge from the 30 minute GE slope at 10:45. Interestingly, the GE slope continues to diverge for 30 minutes, which is somewhat longer than we are use to seeing over the past 2 weeks, and then reverses to the downside at 11:15, accompanied by a parabolic sell signal and a 816 sell signal 6 minutes later. With these 3 indicators now in sync, the scene is set for a clear GE downtrend.

Looking carefully at the chart you might wonder why the GE reversal at 10:15 doesn't merit the same level of confidence as the 11:15 trade.
The reason is simple . . . the NYAD is still in an upslope at 10:15. While a more risk tolerant trader might have taken the 10:15 GE sell trade as signaled by the parabolics and confirmed by the 816 cross 8 minutes later for a net gain of .17 - .20, I prefer to wait for all 3 signals to be in sync. The result is fewer trades, but also fewer whipsaws and less anxiety. That's my comfort level.

3 comments:

Randy Reis said...

Hi I use tradestation and only the most recent LR line shows up on the chart, how do you get the previous lines to remain?

thx

bzbtrader said...

Randy,
Let's clarify a couple things.
On the above chart, which is Schwab's StreetSmart Pro, there are no linear regression lines. The orange, blue and pink lines are trend lines which I can manaually insert with a point, snap and click mouse action. Schwab does not have linear regression studies which, for my needs, is a hugh pain.
The EOD charts featuring 3 LRs studies are in Telechart 2007 format and with that software you can adjust the length and width of the linear regression and the projection of the mean, which is why I use it.
TS makes display of the LRs more diffcult and I gave up a while back trying to replicate the TC2007layout, because at the tme I didn't really need it.
You might also search the TS online "knowledge base" for linear regression channel to see if someone else has coded the study. Since I don't use 8.3 I don't have access to that online file.

Randy Reis said...

I got it now, thanks