WEEKLY and DAILY STOCHASTICS

Here is an interesting chart that I am looking at. It is on XGLD, but if you want to use the ETF GLD, it could still be put into use. What I noticed on this chart is the overlay of the weekly and daily Irwin Cycle Stochastic. Since this stock is in a downtrend, I noticed it was useful to short when both the weekly and daily stochastics were above 80. It looks as if 3 out of the 4 trades would have panned out as winners.

One other thing is that if you use a 50 day EMA as the trend indicator and sell when the weekly Irwin Cycle Stochastic takes a down turn after being above 80.

My problem is that I cannot find out about this Irwin Cycle Stochastic on the internet as of yet. There is really no good description on it so I have taken Full Stochastics and used these parameters: Shorter time frame is (14,3,3) and the longer time frame is (60,15,15). The buy area is best when both indicators are below 20 and the best shorting opportunity is when both are above 80. If you want to take short term trades, buy when long term %K is above %D and short term %K crosses above %D. Short when long term %K is lower than %D and short term %K crosses below %D. It doesn't look like it does well on indices. I just need to backtest the system to see how it does.

JD

GXDX and LMNX

What is up with the X's?




Anyway... GXDX has not panned out yet so now is the time to sell a covered call/buy a put/sell a bear call spread. If you understand those statements, kudos to you. So, the logic goes is that since the ADX is below 25, the stock is non-trending. The slow stochastic is now in OVERBOUGHT territory. If the stock breaks back down below the 200 day moving average, perform those trades.



So as for LMNX - if the stock breaks above $22, buy the stock or sell bull put spread. Why would I buy at $22 and not now? Well the stock is not trending as noted by the ADX being below 25 and the Slow Stochastics is in OVERSOLD territory.

Good luck trading.
JD