Stock_Doc

Ok some of you have asked what do I look for in a stock. Rather then give you a half-assed answer that might not make much sense (w%, stochs, fine but what exactly do I for in those actual indicators as an example) I decided to put the time to write this up. So please bear with me some of it may be over-simplified but that's for the true newbie's help which are the ones that need it the most. Anyways, hopefully you'll all understand it by the time I'm done.

On off hours when I scan charts I look at many, many indicators. Remember the more indicators that say yes the more likely yes it will be. Some of them are like the final stamp of approval while others are simply to help. I'd have to say the first thing I actually look for is volume. You HAVE to HAVE to (repeated on purpose) make sure there's enough money going through the stock that you can get out if and when needed, known also as liquidity. The second thing I look at are any particular formations in the candles, candle forms, or if the stock has been down 2,3 or 5 days (fibonacci's). Anything, that shows up like this is an immediate write down for further look.

Here is a website that had some good candle formations:
http://thresholdtrading.com/members/...formations.cfm or
http://tinyurl.com/cval4

Ok let's look at the indicators, now I don't think I need to explain what each indicator does, there are plenty of links in this website to satisfy that. However, I will show you what I look for in the particular of each indicator.

I would suggest right click opening with new page for this.
http://tinyurl.com/aoazg

Now we're gonna take a look at PHBT's chart. If the chart does not have an example I want to show then I will try to explain how I can.

A. "The trend is your friend" and believe me it is. This is the most simple and basic way to find out what a stock is doing. If the trendline is broken then things aren't going to continue the way they are. Now allow for some leniency because sometimes it will fall but bounce back but you don't need much giveway room.

Notice PHBT does have attention as it get's a lot of volume for it's overall average.

B. Notice that I circled on the RSI two areas. That's me comparing the fact that the rsi is now CURLING upwards, it is not moving jaggedly and I am now looking at the last time the rsi curled upwards. Look what happened that is when the stock took off. You also notice the line there. Do you see how that line has a hard time breaking that? It's support on the indicator (some refer to it as historical reference, but I like to just say support and resistance in the indicator). So what is PHBT doing now that it is back in the "support range," it's bouncing back again.

The MACD is a nice little indicator but it is not one of my favorites. It is a lagging indicator and so it may show buy signals a couple days after the stock has started it's run. Good for swing traders though.

C. Wilder's is another great indicator. Notice again the lines it's not crossing and how they're breaking away.

D. Stochiastics are one of my favorite indicators and a before tool for daytraders. Notice the cirles? when you scroll up you'll notice the right most circle in that indicator just crossed and that day was a green day...surrounded by those red days, pretty neat if you ask me. Notice the circle also over to the left. The same day is it crossed is the start of it's red day. (my stoch settings are 5,3,3 instead of 14 but you can still look for the same thing I just like 5 better)

E. Ok it didn't happen today but look at a few days ago when it flattened out. When was the last time it flattened out and how long did it go for. I got my answer about a month back (the other circle) and the answer was that it did NOT like to stay flat for long, so what happened it bounced (the one about a month or two back after bouncing was part of the big bang) and look what happened it was the same length and bounced (again if you scroll up when the bounce happened it was again a green day). Notice also the support and resistance line. It's at an indicator resistance, just like a stock price if it breaks it moves on to the next level and so on.

F. Chaikin Oscillator is a nice tool to know what's up with the money flow, it's dipping but hasn't crossed. Notice the last day, it's at the same level as about a few weeks ago. Support?

Aroon, I'm not gonna lie I don't really know this one well and mainly use it as a reinforcement.

H. Notice on the Acc/Dis that prior to the break three times it could not break the MA and it has now (cause for concern since that's the first time in more then a few tries). BUT the trend wasn't broken and is coming up to the trendline.

I. CCI is another fav indicator. Notice the Double and Triple Tops and what soon happened? Also notice how the tops are all at about the same range. Resistance!

J. Again just like with the Acc/Dis notice how it did not break the line and continues to bounce off of it. Again trendlines as well.

The Aroon Oscillator is a bit niftier in my book then it's predecessor. Most notable things I look for are just like before. What was it like when it was in this pattern last time and even the time before? After it's long pause she broke but notice it's also higher up this time so can the reverse happen or continue upwards?

K. The Ultimate Oscillator notice that support that can't seem to break for a couple months. Also notice the resistance up top?

L. The StochRSI is a nice comparison of overbought/oversold strength compared to Stochiastics reading

SMA's, ok notice that the price of PHBT cannot hold a sustained price above the 200 sma cause for concern because if it can't break then it can't go up much higher. I know I know...duh, right? The 50 SMA is also providing some protection as well.

Another thing I like to look at and, unfortunately, I am unable to show you is the Linear Regression Channel. The LRC is an absolutely wonderful way to figure breakouts and bounces. Normally, I will look at 1,3,6, and year chart with lrc to get general ideas. I really like three month but the one month is also useful when a stock has broken out for the past week or two if there's new highs and such.

Fibonacci Retracement and Fans are also pretty reliable in getting general ideas of where support and resistance are.

Hehe, I can't think of anything else offhand but I'm a bit tired so if I seem to be missing something don't be afraid to ask or point something out. Now this seems like a lot of analysis and it is. However, once you learn what to look for and it becomes a habit you can do this in a few minutes. Well, off I go hopefully this helps anyone and everyone.