Stochastics: An Accurate Buy and Sell Indicator
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Stochastics are used to show when a stock has moved into an overbought or oversold position.
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it can be beneficial to use stochastics in conjunction with and an oscillator like the relative strength index (RSI) together.
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it tends to help all investors make a good entry and exit decisions on their holdings.
Williams Alligator Indicator
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It uses three moving averages, set at five, eight, and 13 periods. The three moving averages comprise the Jaw, Teeth, and Lips of the Alligator.
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The indicator applies convergence-divergence relationships to build trading signals, with the Jaw making the slowest turns and the Lips making the fastest turns.
Indicator lines converging into narrow bands and shifting toward a horizontal direction denote periods in which the trend may be coming to an end, signaling the need for profit-taking and position realignment. This indicates the alligator is “sated.”
The indicator will flash false positives when the three lines are crisscrossing each other repeatedly, due to choppy market conditions. According to Williams, the alligator is “sleeping” at this time.
This is a sleeping phase, and most traders are best to stay away.
Adjusting Strategies to Moving Average Slopes
Price pulling back to test a rising average from above is more likely to hold support than when testing a falling average.
Price bouncing into a falling average from below is more likely to roll over than when testing a rising average.
Price above rising long- and short-term averages generate a bullish convergence that favors long-side strategies, with bigger positions and longer holding periods.
Price above rising long- and short-term averages generate a bullish convergence that favors long-side strategies, with bigger positions and longer holding periods.
Price below rising long- and short-term averages generate a bullish divergence that favors dip-buying opportunities and value plays.
Price below falling long- and short-term averages generates a bearish convergence that adds power to short sale strategies,encouraging bigger positions and longer holding periods.
Price above falling long- and short-term averages generates a bearish divergence that favors profit taking and short selling.
Get aggressive on the long side when the price is above rising long and short-term moving averages. Get aggressive on the short side when the price is below falling short and long-term moving averages. Get defensive when slopes don’t match, or when the price is trading below rising averages or above falling averages.