Posts Tagged ‘technical indicators’

Which Stocks Are Ready To Pull Back?

Friday, November 18th, 2011

The overall Australian market had a spectacular run in October this year, up a staggering 15 percent from trough to peak on the ASX/S&P 200. In light of this you may wish to ask the experts what stocks are likely to pull back in the new term.

Market Analyser Can Help

You can use the Market Analyser software to identify keys stocks which are indicating that they’re due for a pull back.

Start by using the Watchlist Wizard tool to quickly create a watchlist of stocks from the ASX Top 300. (See below for instructions on using the Watchlist Wizard.)

We can then use the Prealerts scanner available to Market Analyser users to identify stocks that indicate there is “distribution” taking place, as stock is offloaded into the weaker hands.

Set up this scan through the Analyser Wizard, a handy tool within the Market Analyser allowing you to access the Prealerts indicators. For help with this tool check this post.

Market Analyser: Selecting the Analyser Tool

Yesterday’s scan produced the following list:

Market Analyser: Distribution Scan

As you can see there are a number of stocks that are currently undergoing distribution and could offer a potential sell signal. You may want to research these companies further before entering a trade.

The effectiveness of this scan depends on the current trend of the underlying stock, and we have illustrated this in the following three candidates which came up in a recent scan:

1) AWE Limited (AWE)
2) Metcash (MTS)
3) Spotless (SPT)

Note that you can also use volume as a confirmation of the sell signal, as you would be looking for volume to pick up as the share price falls.

AWE Limited (AWE)

AWE (formerly Australian Worldwide Exploration Limited) is engaged in exploration, development and production of oil, gas and condensate primarily in Australia and New Zealand. AWE concentrates on exploration and appraisal-type assets, in regions of proven prospectivity and where there is a high chance of commercial success.

Market Analyser Scan - AWE Limited

You can see that the Prealerts worked fabulously for AWE earlier in the year, giving four winning sell signals when the general trend of the stock was down. Now that the stock price is attempting to recover, the Prealerts offer a good signal of when the stock price is likely to take a pause. AWE is now at a key resistance level, but you would want the stock price to trade below the previous swing to confirm a sell signal.

Metcash (MTS)

Metcash Limited (formerly Metcash Trading) is a wholesale distribution and marketing company specialising in grocery, fresh produce, liquor, hardware and other fast-moving consumer goods. MTS has four business units: IGA Distribution, Campbells Wholesale, Australian Liquor Marketers and Mitre 10.

Market Analyser Scan - Metcash Limited

Metcash has been trading sideways for the past couple of months and the Prealerts signal has given a great signal that the share prices was due for a pull back. If you took this signal you would be up 4.5% in two days and would be watching carefully for price action around the $4.10 level which has been the key support level for the past couple of months.

Spotless Group (SPT)

Spotless Group Limited is engaged in the provision and outsourcing of labour-based services in Australia, NZ and USA. Their Retailer Services division provides hanger systems, labels and packaging to the garment manufacturing and retail industries worldwide. Facility Services provides facilities management and support services like cleaning, food, linen and garment services in Australia and NZ.

Market Analyser Scan - Spotless Group

Again the Prealert scan gave a great signal back in mid-May. There was another signal in early October which pre-empted a sideways move for 3 weeks, but now we have a signal in as the share price finds resistance at multi-year highs, and offers a low risk sell signal. Note that Spotless Group has confirmed it has received a $698 million takeover proposal (at $2.63 per share) from buyout firm Pacific Equity Partners, but says its directors view the bid as too low. The bid from PEP comes six months after Spotless rejected a $657 million offer from US buyout giant Blackstone Group.

Summary

Utilise the Prealerts features in Market Analyser to scan the markets for your specific trade selection criteria. You will save time and identify some likely pullback candidates.

By Michael Hevern
Investment Adviser

For Buy and Sell recommendations on ASX listed companies register for a FREE trial of MDS Financial Research.

Instructions – Using the Watchlist Wizard

1. In Market Analyser, open a watchlist window by selecting Menu > Watchlist
2. Click on the Watchlists item on the top menu bar, and select Watchlist Wizard.
3. In the Watchlist Wizard window click Next, select Australia from the Countries list, then select ASX Top 300 from the Available Watchlists list on the right of the window.
4. Click the Update button. Your new ASX Top 300 watchlist will now be available from your watchlist window.

Disclaimer: The information provided within this article is not an invitation to trade a specific stock, but is intended for educational purposes only.

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Trading Book Review: Investing with Volume Analysis

Friday, September 30th, 2011

Investing With Volume Analysis

Author: Buff Pelz Dormeier
RRP $49.95 Trader Dealer price $39.95

For all those traders who use volume as a tool in their trading analysis, then this is a must.

Clearly written by an expert in the field, this book looks at the basics of volume analysis and the pure volume indicators. It quickly moves into some more sophisticated aspects of volume analysis, including oscillators and indicators that are specifically relevant to volume analysis in patterns and trends.

Short term traders are not forgotten as Buff explains intraday volume accumulation oscillators.

Volume is a necessary tool in determining investors’ or traders conviction about prices and this book explains how to interpret these signals to recognise upcoming price reversals.

I was particularly pleased to read the chapter on the Volume Price Confirmation Indicator, because as with all traders using whatever system they have developed, confirmation is necessary before taking a position.

It is also pleasing to see the chapter on risk, because even though the reader may have read it all before, it reconfirms and highlights just how important this is.

The book finishes off with a chapter on modern day volume – yes things can and do change and it is great to see these changes noted.

This book gets my tick of approval.

Buy this book now at the Educated Investor bookshop website

Janene Murdoch
Educated Investor Bookshop

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Using Chart Templates in the Market Analyser Software

Friday, September 16th, 2011

Using templates in the Market Analyser software is an easy way to quickly scan through your shares and identify trading opportunities for today.

You can create your own templates, or use the preset templates in Market Analyser to view your charts with all your favourite indicators automatically applied.

At the bottom of your chart you will find a range of templates that have been pre-set for you. Click between the templates to view different overlaid indicators and find the right combination for your style of analysis.

Chart tabs in Market Analyser

Starting with a blank chart you can create your own template by overlaying different indicators. Put all your favourite indicators onto the blank chart. Once you have the chart looking the way you want it to be displayed, right click on the chart and click Save New Template.

Saving a Chart Template in Market Analyser

Now that you have created a new chart you can apply this template to a number of shares that you have in a watchlist. To do this right click on the chart and click Select Watchlist, then click on the watchlist you wish to apply the template to.

Apply Chart Templates to a Watchlist in Market Analyser

Now click on Display Next X Code from watchlist (the third blue circle on the chart tool bar). Using this button you can move through the securities in the selected watchlist.

Display the Next Code on Your Watchlist

Using templates, you can look at all the different shares with the same indicators to identify those shares that stand out as trading opportunities for today.

By Jeff Cartridge
Education Manager

More Tutorials

Market Analyser has an extensive range of chart tools so you can determine the best functionality
for your trading requirements. Tutorials describing the features available can be found under the Help menu within the Market Analyser software.

Free Software Trial

Not a Market Analyser client? Visit the website to find out more about Market Analyser’s features and to download a free software trial.

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Create Custom Indicators in Market Analyser

Friday, December 10th, 2010

If you have been following the markets for a while you may have some particular technical indicators that you like to use. Each indicator helps locate shares which meet a single criterion, but within the Market Analyser software there is a handy tool which allows you to combine a variety of indicators together to find those shares that meet all of your criteria at once.

If you get some free time over the Christmas break I recommend taking a look at this powerful tool, called the Analyser Wizard.

The Analyser Wizard enables you to combine any number of indicators together, with each being required to meet specific rules either on the current day or within the time window specified. For example, you could combine a 34 day / 200 day Moving Average Crossover with a Stochastic Crossover, with a 5 day look back. As long as both indicators returned true within the 5 day look back period, a signal will be generated.

The above example represents a fairly simple combination; however, you can combine as many indicators, price patterns or volume rules as you like in order to build your own custom-designed indicators. You will now be able to cut down on time-consuming stock tracking and watchlist management.

All Analyser Wizard indicators can then be used as scanning indicators in the Analyser window as well as being displayed in charts. And you can also use your own custom-designed indicators as entry or exit rules in the Trading System module.

Using the Analyser Wizard

Within Market Analyser, click on Menu > Analysis > Analyser Wizard, to bring up the Analyser Wizard window.

Market Analyser - Analyser Wizard

Click on New in the top left hand corner to create a new combination, and type in a name for the indicator.

Market Analyser - Analyser Wizard

Ensure your window fills the screen by clicking on the maximise button, in the top right hand corner.

From the list on the left hand side of the Analyser Wizard select the indicators you want to use. Double click on the indicator and then select the parameters you wish to apply. Set the look back period on the right of the screen to determine when the signal must be true. For example if you were using the accumulation indicator you may want to see all the shares where the signal has occurred in the last 5 days. A look back of zero means the signal must occur on the current day only, to be valid. If you use a number of different signals all with the look back of zero it is likely that you will get very few shares because all signals must occur on exactly the same day. Once you have set the parameters click on the indicator in the right hand window to update the parameters.

You can combine a wide range of different signals using the Analyser Wizard. If you want to remove an indicator then click on the indicator on the right hand side of the screen and click the yellow minus button.

Market Analyser - Analyser Wizard

After completing your indicator, remember to click Save on the Analyser Wizard toolbar.

Market Analyser - Analyser Wizard

Now that you’ve created your own custom set of indicators and parameters you can run a scan of the market using the Analyser to identify the shares that meet your criteria.

I wish you a merry Christmas and a prosperous new year.

By Jeff Cartride
Education Manager

Take a free trial of Market Analyser to test the Analyser Wizard for yourself!

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In the Engine Room: Customising the look and feel of The Bourse

Tuesday, May 19th, 2009

The Bourse is customisable in many ways and you can set up your screens to have whatever colour, fonts and layout that you want. Let s go over the main items to keep in mind.

Modify Colours

Once you understand how to modify colours for one screen you can apply the same procedure for everywhere else in The Bourse.

Let s modify the colours of a chart to start off with.

  1. Open a new chart and load a stock code.
  2. Once the chart is loaded then select Candlestick from the bar type drop down.
  3. With the mouse right click on the chart and select Color/Grid Preferences
  4. The first item to remember is that the left and right buttons on your mouse are used to select the colours from the Colour grid.
  5. Background colour: right-click
    Foreground colour: left-click

  6. As an example, change the background colour of the chart. Do this by right-clicking on the colour grid and selecting the colour you want.
  7. The background colour of the chart will be changed once you click on the OK button.
  8. You can also select the type of grid lines that you want on your chart or simply switch them off.

  9. Once you have made some changes, you can save the changes as a Colour Preference Scheme. This is done by clicking on the Save as button. Note: you do not have to do this for the colour changes to take place. However, doing so will keep the default colour scheme that came with your installation of the Bourse as original.
  10. To save a colour scheme, click on the Save as button and the following window will be displayed allowing you to enter in a scheme name. Give it a name and click OK.
  11. If you save a colour you can simply select it by using the Preference schemes drop down selection box.

Change colour of multi-part chart tools

As an example of a chart tool that is made up of multiple colours, let s look at changing the colour of the OHLC bars on a chart.

The default colour scheme that installs with Bourse has OHLC bars as green for bullish days and red for bearish days. The term bullish is this case refers to days that have a higher close than the previous close and visa versa for bearish.

One thing that you take into account with colours is the representation of what a certain colour means to you. For example, green means profit and red means loss. However, when going short on the market you want to see lots of red on the chart. Maybe you can remove this emotional association by selecting different colours.

For the purpose of selecting an example, let s use two differing colours for the higher and lower closing price days.

  1. Right-click on the chart and select the Colour/Grid Preferences item.
  2. To find an item quickly in the elements box click the mouse pointer anywhere in the box.
  3. Now type the first letter of the element that you are trying to find. In this case OHLC, so type in an O .
  4. The first item in the list, that s starts with an O, happens to be OHLC, the chart element that we are looking for.
  5. The two arrows above show the two colours for the bullish day and the bearish day, when you first do this these colours will be green and red, respectively. Click on the top colour box, this is the colour for the bullish bar colour, then left click your mouse pointer on the colour that you want for the bullish day.
  6. Do the same now for the bearish day. However, first click on the bottom (lower) colour box.
  7. Finally click on the OK button to make your changes permanent.

Change colour of multiple indicators of the same type

On many occasions you want multiple copies of the same indicator on the chart (eg. a multiple moving average, or multiple Bollinger bands etc.)

The Bourse allows you to do this and to allocate a different colour to each. Let s do an example of how you can have 4 different colours for 4 moving averages on a chart.

  1. Once again right-click on the chart to select the Colour/Grid Preferences menu item.
  2. Find the Moving Average element (remember – click in the element name box and press the m key on your keyboard. You will have to press it twice.)
  3. The 8 boxes at the bottom indicate the 8 different colours that you can have for moving average lines on the chart.In our example we will have 4 moving averages and we want the same colour to be used every time that we apply our 4 moving averages. Each colour box above represents the colour of a moving average; therefore, you should make the first 4 colours different, then the next four colours the same as the first 4. Confused?

    The colour in boxes 1 and 5 should be the same, just like the colours in boxes 2 and 6, 3 and 7 and finally 4 and 8. So your colour boxes should look like this

  4. Now when you apply your 4 moving averages they will always appear in the same colour sequence.

Changing Font

Changing font is very simple and is the same on nearly every screen in The Bourse.

  1. Right-click on any screen and select the Font menu item. This will display the Font dialogue box.
  2. This is a standard MS-Windows font toolbox and selection of font style is quite simple.
  3. Modify Screen Layout

    The modify layout function in The Bourse is quite comprehensive. Each screen type has a different layout feature set that can be modified.

  1. To modify the layout of a screen, simply use the right-click function on the screen and select Modify Layout from the menu. Depending on the screen you are viewing, the following will be displayed.
  2. The layout dialog box will allow you to add, remove or change the order of columns on the watch list, market depth, options, warrants and futures screen, and also trade history. In fact, any screen that uses a grid layout will use the following.
  3. Some key items to note about the above. Let s assume that you are making this change for a watch list. The Default Template check box, which is circled above, allows you to save this layout for all watch lists. That is, it will become the default template that is used for all watch lists viewed from this moment on. Place a tick in this box if you wish for this to happen. However, if not ticked, then the changes you make will only affect the current one.
  4. To change the order of the columns, simply click on the column name, under the Selected items section and then click on the up and down buttons below the list.

By Jeff Cartridge
Education Manager

If you haven’t tried The Bourse before, click here to register for a free trial!

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