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Re: Stochastic confirmations and Another question...

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You might get similar results/information by plotting multi period
stochastics.  for example you have a daily chart with a 14 period stoch; on
a weekly chart a 14 period stochastic corresponds to a 70 period stoch (70
trading days). This will probably give you similar results/information as
the 14 period stoch plotted on a weekly chart.

Let me know how this works out.


At 03:40 PM 12/9/97 -0000, Steven Buss wrote:
>You may remember that I am looking at real time prices via another product
>on a trial basis.  I'm using Weekly and Daily bars in Metastock and then
>Hourly and 10-minute bars in the other product.
>In staring at these various multi-period bars (each with associated
>stochastics) for awhile, my current thinking is that one can also think
>about a stochastic value at one period confirming the move of the stochastic
>at another period.  That is to say, if you want to know the significance of
>a 10-minute bar stochastic move, say above 20 or below 80, then, look at the
>hourly and daily (even weekly stochastic chart.)  It seems to me that the
>value of the stochastic as an indicator is enhanced by this multi-period
>view.  (By the way, this is also interesting to look at from the point of
>view of MACD and I'm assuming a host of other indicators.)
>You may remember that I posted a note recently about an article by Alexander
>Elder on the importance of this multi-period view.  It was that article that
>got me on this particular track.  From what I've seen so far, this might
>well be a very important insight and one that Metastock in its current
>implementation doesn't really help with.  (That is, you can't write an
>indicator or exploration or system test that references data from multiple
>time periods.)
>Which brings me to my question:  (All my posts that provide info are really
>disguised attempts to learn something from someone else.)  Has anyone
>written an indicator (e.g., a stochastic or MACD) using daily data that
>relatively PRECISELY replicates the values of these indicators at the weekly
>level?  My belief is that the mere increasing of the number of bars within
>the indicator doesn't cut it.  (e.g., Take a look at the DJIA daily chart
>with a stoch(26,3) and then the same DJIA on a weekly with a stoch(5,3).
>They're not the same thing.)
>Am I wrong in believing that one can't write a stochastic against daily data
>that relatively PRECISELY replicates the look of a stochastic on a weekly?
>Steven Buss
>Walnut Creek, CA
>-----Original Message-----
>From: Frank B. Gaylord <fbg@xxxxxxxxxxxxxx>
>To: metastock-list@xxxxxxxxxxxxx <metastock-list@xxxxxxxxxxxxx>
>Date: Monday, December 08, 1997 1:08 AM
>Subject: Re: MIRAT Long and a Faltering Stoch: A Question
>>At 07:17 AM 12/7/97 +0000, Steven Buss wrote:
>>>The S&P 500/100 show the daily Stoch(5) and Stoch(13) both well above 80
>>>the weekly Stoch(5) also well above 80 (and looking like the daily
>>>The DowInd, Nasdaq Comp, and Nasdaq 100 stochs of the type noted above are
>>>below 80 and rising.
>>>I assume that this MIRAT Buy Signal, then, would be based on market action
>>>in which the Stoch for the two S&P indices would remain above or close to
>>>for at least as long as it takes the other indices to catch up.  Is this a
>>>correct interpretation?
>>>Frank, my memory is that you're the one who posted the recent note about a
>>>Stoch that doesn't drop being trend indicating (or something like that, I
>>>can't find the note).  (c.f., latest issue of TASC on the
>>>Sometimes a Stoch drops below the 80 signal line and this is an extremely
>>>important thing to pay attention to because the drop to below or close to
>>>will turn out to have significant price implications.  But sometimes the
>>>drop below 80 is very short-term and the return to a reading above 80
>>>signals continuation of the trend.  (The article in TASC points out that
>>>return to a reading above 80 is itself a signal of the continuing trend,
>>>Frank's(?) note also pointed out.)
>>>My question is this:  Are there one or more indicator(s) one can use in
>>>conjuction with the stoch that provides some significantly reliable
>>>into whether a below-80 faltering stoch signals the beginning of a
>>>significant correction or merely a breather before the stoch moves to
>>>80 again?
>>>In the VERY FEW cases I've looked at, it seems like a default parm MACD
>>>provided some early insight into what might be the actual future of the
>>>stoch in the kind of case I've laid out above.
>>>Steven Buss
>>>Walnut Creek, CA
>> :::::::::::::::::::::::::::::::
>>Steven -
>> MIRAT does not use Stochastic in its algorithms.  Another Tools for Timing
>>program, the user interpreted TIMER PROFESSIONAL, does make available
>>Stochastic of Price and its version of an Advance/Decline Line.  I've
>>uploaded to my web site a page showing this.  The URL is:
>>http://www.usinternet.com/users/fbg/tpstoc.htm.  I like what I see in that
>>graph, the two Stochastics rising rapidly, with Price leading both.  If
>>Price were lagging behind, I would not think as I do, that the Market will
>>be going up for at least the next few days.  I don't have a crystal ball,
>>but I do see Price leading the two Stochastics, which will have to do in
>>its place!
>> A couple of notes on Stochastics in this context; MIRAT uses Signal Lines
>>of 25 and 75 and you are using 20 and 80.  I only point it out for when
>>comparing graphs.  Also, on my web site page I am showing the DJIA and not
>>the S&P 500, so the Stochastics of Price is that of the S&P 500.
>>Stochastics of the Advance/Decline Line is of the NYSE, the same with DJIA
>>and the S&P 500.
>> You ask about confirmations of Stochastics.  One I use, already mentioned
>>above, is Price.  Remembering that Stochastics are Moving averages of the
>>relationship of Price to the Range of Prices over a given period of time, I
>>look at Stochastics as a representation of how well Price is doing against
>>that Range of Prices.  If Price and Stochastics keep going up, I see
>>Stochastics confirming Price.  In up movement, it will be Stochastics
>>confirming Price, as Stochastics, by its Moving Average nature, must lag
>>behind Price, more volatile that Stochastics.  Stochastics can lead price
>>if Closes are consistently higher from one day to the next and those new
>>highs (for that immediate time period, but not necessarily 52-Week or other
>>longer than a few days time period) are small.  In other words, if Price is
>>moving up slowly and each day brings a new high, then Stochastics can lead
>>Price in its rise.
>> If Stochastics snake along between the Top Signal Line (75, 80, whatever)
>>and the top of the graph, then I see that as simple confirmation that the
>>upward Price move is strong and will probably continue for the next little
>> Williams %R and RSI (Relative Strength Index) are two Indicators I have
>>used in corroboration with Stochastics. I've also used Stochastics with
>>longer parameters, say 21 days and higher and lower Signal Lines (85 or 90
>>and 10 or 15) as more of a confirmation of a trend. I should add that I
>>only use Signal Lines for points of reference, not saying that something
>>has to be done when one is crossed, concentrating more on the direction,
>>rate of change and consistency of Stochastics.
>> I believe that everyone should have a few Indicators or other tools with
>>which they become comfortable in using, Indicators that they come to trust,
>>and Stochastics is the one for me!  For the record, the others are Moving
>>Averages and Linear Regression (Line of Least Squares).  As I see more and
>>more of Jim's Channel stuff, I am feeling more comfortable with Channels.
>>-- Frank :-)
>>High Return on Investment using Technical Analysis
>>Minnesota Long Distance Canoe Racing