QUESTION OF THE WEEK: INTERPRETING THE STOCHASTIC
This week's question comes from Mike in Baldwinsville, NY. [Edited for length.]
Q: Mr. Town, what enjoyable reading this book has been. Finally, after all the books and money spent, you have provided a very concise road map to get from point A to point B. I read the book five times, and picked up new, valuable bits of information each time I read it. If only I could have had this book years ago. I'm sure I would be financially independent by now.
My question is relative to the Stochastic indicator. If the buy line is above the sell line, but fairly close to the 80% line, would that still be considered a buy or will it always start heading down when it closes in on 80%?
A: Thanks, Mike! If that thing is tipping down, that is not good news. It's still a buy, but better be confirmed by a strong upward MACD and MA. It certainly doesn't always go on down through the sell signal, but it means that support is waning -- so watch out.
Now go play!
Q: Mr. Town, what enjoyable reading this book has been. Finally, after all the books and money spent, you have provided a very concise road map to get from point A to point B. I read the book five times, and picked up new, valuable bits of information each time I read it. If only I could have had this book years ago. I'm sure I would be financially independent by now.
My question is relative to the Stochastic indicator. If the buy line is above the sell line, but fairly close to the 80% line, would that still be considered a buy or will it always start heading down when it closes in on 80%?
A: Thanks, Mike! If that thing is tipping down, that is not good news. It's still a buy, but better be confirmed by a strong upward MACD and MA. It certainly doesn't always go on down through the sell signal, but it means that support is waning -- so watch out.
Now go play!
