So... When to Sell?, Idea #1

[Tomanyiron]

OK, so you recently moved into stocks (C, S, or I). And things are proceeding well, so far. But at some point, some forms of pullback will come. With the IFT rules, you can't be jumping in and out. So what kind of a substantial change would be a good signal to move back to G.

I will start off with my Idea #1. When SP-500 drops below the 50-Day EMA. Look at the history.



https://schrts.co/xpHxjikJ

[md2018]

You don’t seem to make much gain between the buy and sell points but at least you don’t loose a lot between sell and buy points. Looks like you would lose out on a lot of upswing between the June low and the Aug high. And from the Oct low to the Nov high?

[Tomanyiron]

You don’t seem to make much gain between the buy and sell points but at least you don’t loose a lot between sell and buy points. Looks like you would lose out on a lot of upswing between the June low and the Aug high. And from the Oct low to the Nov high?

Blame that on the crazy market these days. If we ever get back to longer trends this would make-out like gamebusters.

but at least you don’t loose a lot

Sometimes that's the best you can ask for.
Anyway, only the first tool for the box, got more to come.

[daemon]

I like to use Bullish Percent Index along with the support and resistance dots (SAR) to buy or sell

[12squared]

I like to use Bullish Percent Index along with the support and resistance dots (SAR) to buy or sell

I do too. How did you determine the PSAR (aka Parabolic Stop and Reverse) parameters, which are not the defaults (0.02,0.2)? Also, how are you making use of MA(5) and MA(10)?

[daemon]

I didn't determine the SAR parameters. Someone must have pointed the chart out to me at one time and I just simply copied their settings. I don't use the MA's other than see which way they're going. But I rely on the slope and spacing of the dot's to let me know how strong the trend is. When they're nearly vertical and widely spaced I feel better about the uptrend (if slope is up) or downtrend (if slope is down). For ex, from mid Oct to the end of the month I got in as much as I have been all year (60% in) then gradually backed off as we got closer to the end of month when the upward slope was petering out. Unfortunately, the better call would have been to stay in til now. But having struggled all year I decided to sell the rally, as one should in a bear market. Right now it looks like it did in mid Aug when we hit the peak of that rally. But now that I'm 100% in G it will likely take off again. lol

I like to use Bullish Percent Index along with the support and resistance dots (SAR) to buy or sell

I do too. How did you determine the PSAR (aka Parabolic Stop and Reverse) parameters, which are not the defaults (0.02,0.2)? Also, how are you making use of MA(5) and MA(10)?

[12squared]

Here's my current favorite.
https://stockcharts.com/h-sc/ui?s=%24BP ... 2734535327

sc.png

The trend is intact when all three colors of confetti are on the same side of the curve.

[Tomanyiron]

Thanks guys for your charts, and contribution to the thread.

Here's my current favorite.
https://stockcharts.com/h-sc/ui?s=%24BP ... 2734535327

144, can you give your interpretation of what was going on (with your chart) the first 2 wks of Aug.
https://schrts.co/BbePZNwG

[12squared]

First off, the bullish percent indices are not cap weighted like the S&P. They represent the percentage of the group that is advancing versus declining. This doesn't change as much day to day because it's less affected by the big boys at the top.
$BPSPX is the better metric when looking at the S&P. $BPNYA covers a broader group of stocks. I find it better to use it in conjunction with the S fund proxies.
In the period selected, the slope is still positive but not increasing. This is consistent with a flattening of the underlying price. Higher slope equals steeper curve. The declining TRIX is also consistent with a slower rate of increase of the price.

[jatelle]

I will start off with my Idea #1. When SP-500 drops below the 50-Day EMA. Look at the history.

Tomany, this one is my favorite for buying but not for selling. For a buying strategy I recommend having both the 50 EMA and 50 SMA on the Daily chart. There appears to be an important interplay between the 50 EMA and 50 SMA and it is a leading indicator in Bear markets (not Bull markets). In a Bear Market the EMA is typically sloping downwards and then falls below the 50 SMA. But periodically in a Bear market the 50 EMA will cross above the 50 SMA (bull cross) indicating that there is about to be a short-term rally (1 week to several weeks). Wait for it to cross and then buy. This way you avoid the head fakes of Sept 9 and Oct 28. Previous crosses were on March 21 and June 30. It crossed again on late Nov 2/early Nov 3 - so those days would have been good days to buy. The reverse does not work - the 50 EMA crossing below the 50 SMA is a lagging indicator for selling. Tell me if you see the same. Now if I Jatelle could just follow my own rule...

[Tomanyiron]

Thanks jatelle, I did a modification. I like what it did in June. But with the IFT delay the one in March was a wash.
https://schrts.co/AvmUtPfu

[jatelle]

Thanks jatelle, I did a modification. I like what it did in June. But with the IFT delay the one in March was a wash.
https://schrts.co/AvmUtPfu

You're very welcome Tomany! March would be a wash only if you use this strategy for selling. I only use this strategy for buying in a Bear Market. For selling in a Bear market I draw a trendline between entry day low and low of the first major pullback. If price drops below that trend line - I sell then or on the next bounce up (failed follow) - odds are that it will flush after that. On the rare occasion you might miss out on a last gasp surge but they almost never last. My goal is just to sell near the high not at the perfect high. So for March: it crossed at premarket on 23rd. So IFT by noon on March 23 (closing price 444). It broke below the trendline mid afternoon March 31st so then IFT by noon on April 1 (closing price 453) - only a 2% gain in 1 week but better than G. Alternatively, one could stay in for one more day hoping for a juicy bounce day (failed follow) on April 4 for that extra 3/4% but it is riskier because it might peak in the morning and then crash in the late afternoon. Does that make sense? See if it tests out for you.

[daemon]

Thanks guys for the discussion. I'd like to see these examples play out in real time. It would be great if someone could "suggest" a buy/sell zone as we progress onward based on these ideas. I guess the next signal we'd want to look for is a sell signal now that we are in a buy signal.

[harryface]

The discussion here is very interesting but I am not literate in Stock charts. Where did you guys learn to read a stock chart and what the EMA, SMA, SAR, etc. means?

[jatelle]

The discussion here is very interesting but I am not literate in Stock charts. Where did you guys learn to read a stock chart and what the EMA, SMA, SAR, etc. means?

Good questions. I trade with TD Ameritrade and have learned a lot from their free technical analysis webinars and online resources. You can find much of their TD Technical Analysis on Youtube: https://www.youtube.com/playlist?list=P ... _Fg3mcem2G
I have also found Investopedia.com to be an excellent resource.

Moving Averages tell you the average price of a stock over a period of time. So a 50 MA tells you the average price of a stock over the past 50 days on a Daily Chart. The main difference between a Simple Moving Average (SMA) and Exponential Moving Average (EMA), is the speed with which they respond/react to price movements up and down. As rule an EMA responds faster to price changes over the period of time than an SMA. Investopedia has a good overview of SMA and EMA:
https://www.investopedia.com/articles/t ... ompare.asp

I hope this helps you get a start on your learning.