My Technical Analysis Rules

teStock Chart Indicators

1. RSI -
   
1. internal strength.
2. Quantify price momentum
3. Depends only on change in closing prices
4. Use 14 period RSI
5. Above 68 = Bullish
6. Ignore stocks that have not reached 68 in past
7. A revisit of 68 with price and volume breakout = GREAT, regardless of market conditions
8. IPO stocks dont have previous 68 RSI experience
2. +Volume
1. Breakouts must have at least 2 weeks of above average weekly volume
2. Future winners will close higher in price in the 2nd week of a breakout, as the 2nd week volume is above average as well
   
3. OBV
1. Relates momentum to price change
1. Allows us to see a slow uptrend that is unassuming whereby a group or company is establishing a position but trying not to alert the public
2. A new high means a new group entered the stock
3. A great stock will have a smooth OBV
4. Want OBV to at least trend higher showing a new breed of buyers over time
5. Want a great steep increase in OBV with price breaking out above key resistance.
6. Watch OBV to tell you how long to hold on
7. USE OBV to gauge Overhead Supply!
1. The more a stock has corrected from the OBV peak, the higher the overhead supply = BAD
8. Large Caps
1. OBV with large caps don't give perfect buy signals
2. Usually OBV increases AFTER key resistance price breakout -
   
3. That is why large caps are slower in rallies
4. OBV spikes is not always a good thing!
   
9. KEY: Smooth OBV, then steep break in sync with(or before) price breakout will always give higher and faster gains.
4. Relative Strength Rating
1. stocks % gain relative to entire market over last 12 months
2. 1-99 where 99 is best
3. Want to buy stocks when their RS Rating gets to 95+
5. Relative Strength Line
1. Known as Price Relative
2. Compares performance of any stock to some other, or an index i.e. S&P500 (Use S&P 500 for my analysis).
3. Combine his line movement with RS Rating = strength + momentum
   
4. Buy signal when RS Line hits an new high, especially a new All time high
5. RS Line will make new highs even before prices do! (EXCEPT FOR LARGE CAPS)
6. Large Caps
1. RS Line makes highs well after breakout
2. Avoid Large Caps with this analysis
   
6. Moving Averages
1. 10 Week Exponential MA
2. 50 Day Simple MA
3. 200 Day Simple MA
4. Best stocks find support above or around important trendlines
5. Avoid stocks whose lower MA crosses a higher MA in a downward direction (i.e. 50DMA goes below 200 DMA)
6. Stock falling beneath 50DMA and does not rebound means Banks are getting out and not supporting the stock
7. Stocks falling beneath 200DMA is your last call to get out
8. Watch stocks action as it hits 10 Week MA and 50 Day MA, Banks should support good stocks at these levels, else get out
9. Buy Signal - 50DMA crosses 200DMA on heavy volume
10. Buy Signal - flat 50DMA. Meaning it is resting prior to a sprint. If 200DMA also flat, Huge Rally coming!!!