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What is the Significance of the Different Candlesticks Colors?

Using the default color settings for a candlestick chart, there are four possible combinations: a red filled candlestick, a red hollow candlestick, a black filled candlestick and a black hollow candlestick. SharpCharts users can also choose different colors for up and down candlesticks.

Let's first look at the colors. A candlestick is black when the last price is above the prior close. A candlestick is red when the last price is below the prior close. Using this color-coding, chartists can immediately see if prices closed up or down.

The hollow or filled aspect is determined by the relationship between the open and the close. A candlestick is hollow (white) when the close is above the open, which implies buying pressure after the open. Conversely, a candlestick is filled when the close is below the open, which indicates selling pressure after the open.

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Red filled candlesticks and black hollow candlesticks are quite common. A red filled candlestick indicates selling pressure because prices moved lower after the open and the close was below the prior close. A black hollow candlestick indicates strong buying pressure because prices moved higher after the open and the close was above the prior close.

Red hollow candlesticks and black filled candlesticks are relatively rare. A red hollow candlestick forms when the close is above the open, but still below the prior close. A black filled candlestick forms when the close is below the open, but still above the prior close. Both types of candlesticks form after a gap, often a large gap, and they indicate that prices moved in the direction opposite the gap.

Which Indicators Can I use to Define Overbought and Oversold?



Bound momentum indicators are best suited for overbought/oversold analysis. Basically, there are two types of momentum oscillators: bound and unbound. Bound oscillators, such as RSI and the Stochastic Oscillator, fluctuate within a specific range, zero to one hundred in this case. Unbound oscillators, such as MACD and Rate-of-Change, do not have upper and lower limits. This makes them relatively difficult to use for overbought/oversold analysis.  

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Click this image for a live chart

The example above shows Gilead (GILD) with 5-period RSI in the first indicator window. I am using 5-period RSI instead of 14-period RSI because the shorter timeframe makes it more sensitive and it generates more signals. RSI is deemed overbought when above 70 and oversold when below 30.

Chartists should keep two things in mind when looking for signals. First, identify the trend. Notice that the trend was up from September to February and there were far more overbought readings than oversold readings. Selling on overbought readings would have been a losing strategy. It is best to focus on oversold readings during an uptrend and overbought readings during a downtrend.

Second, wait for a signal that the pullback has ended. An oversold reading occurs during a pullback, but pullbacks sometimes extend further than expected. The early March oversold reading is a case-in-point. Chartists, therefore, should look for some sign that the pullback is ending and the bigger trend is resuming. An RSI move above 50 is one such trigger (green dotted lines).

SCTR Values Now Show Up In Scan Results

The powerful SCTR value now shows in the scan results page. This is one of the strongest values to be presented among the scan results data. With a quick glance viewers can see sector, industry,price,volume, and the SCTR value. This works on all the SCTR types.

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It will generate a results page like this.

Continue reading "SCTR Values Now Show Up In Scan Results" »

How Can I Draw Parabolas and Curved Lines?



Chartists can draw curved lines by selecting the "parabola" feature in the ChartNotes workbench, which is used to annotate a SharpChart. A parabola is a symmetrical curve that forms two uniform halves when bisected. Curved lines are helpful for annotating double tops and bottoms, head-and-shoulder patterns, peaks, troughs and cup-with-handle patterns.

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Chartists can access the "parabola tool" in the upper left corner of ChartNotes. First, click the annotation link on a SharpChart to open ChartNotes. Second, click the tiny triangle in the trend line icon to see the other icons (option). Third, click the "parabola tool" to select it. Fourth, move to your desired chart location and draw a curve. You can then resize this curve by dragging the handles (little yellow squares. The example above shows Regions Financial breaking rim resistance of a cup-with-handle pattern.


How Can I View Dividends and Price Adjustments on the Chart?

Chartists can view dividends and price adjustments by adding "events" as an indicator overlay. Enter "all" as a parameter and click update. The refreshed chart will show the dividend amounts with dotted lines marking the date. The chart for the Utilities SPDR (XLU) shows four dividends over the past year. The first dividend was in mid March 2013 so it looks like we will see another dividend soon. The lower window shows a chart for XLU with unadjusted data. Simply precede any symbol with an underscore (_XLU) to plot data that has not been adjusted for dividends. Unadjusted means the dividend amounts have not been added back into the price. Note that the default symbol (XLU) is dividend adjusted and this price plot represents the total return (price change plus dividends).

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Click this image for a live chart

PPO vs. MACD? When To Use The Other

In publishing an article last week with PPO, we received an email back asking why we started using PPO and what is it?

Here is a chart of both the PPO and the MACD applied to the $INDU chart.

$INDU PPO vs MACD 20140310

Continue reading "PPO vs. MACD? When To Use The Other" »

What Fundamental Information is Available for Stocks?



Chartists can access some basic fundamental information by selecting the full quote option, which is a check box under Chart Attributes. Checking this box will show chartists the sector/industry group, the P/E ratio, the Earnings Per Share (EPS) and the dividends (yes/no). Chartists can also view recent trading activity, such as the bid, bid size, ask, ask size and last trade size. There is also the Volume Weighted Average Price (VWAP) and the StockCharts Technical Rank (SCTR), which is available for stocks for the S&P 500, S&P MidCap 400, S&P SmallCap 600 and Toronto Stocks.

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Click this image for a live chart

14 Essential Groups for PerfCharts and CandleGlance Charts



Do you have any ready made groups for PerfCharts and CandleGlance charts? Yes, 14 key groups are posted below, but first an overview of how to use these two tools. PerfCharts allow chartists to compare performance for a group of securities over various timeframes. Chartists can use up to ten symbols and view performance in absolute or relative mode. Absolute mode simply shows the percentage gain/loss over a time period. Relative mode shows the performance relative to a benchmark, such as the S&P 500. The Sector SPDR PerfChart below shows performance for the nine sectors relative to the S&P 500 since January (year-to-date).

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Click this image for a live PerfChart

As the name implies, CandleGlance charts are small charts that provide chartists with a quick look at price action for up to twelve symbols. Again, this is a great way to get a quick overview of what's happening within a particular group. The image below shows part of a CandleGlance group for the Technology SPDR (XLK).

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Click this image for a live version.

The only thing we need now is a list of groups and the key symbols within those groups. Ask and ye shall receive. There are fourteen symbol lists below that chartists can use to create PerfCharts and CandleGlance chart groups. Simply copy the list, paste it into the symbol entry box, select the chart type, and click go. Some of the lists contain more than ten symbols, which means a culling will be needed for PerfCharts, which accept a maximum of ten symbols.

Major index ETFs: DIA,SPY,RSP,MDY,IJR,IWM,QQQ,QQEW
Equal-weight Sectors: RSP,RCD,RYT,RYF,RGI,RYE,RYM,RHS,RYH,RYU
Sector SPDRS: SPY,XLY,XLK,XLF,XLI,XLE,XLB,XLP,XLV,XLU
Key Industry ETFs: XRT,ITB,KRE,IYR,XSD,FDN,XBI,XES,XME,IYT
Inter-market ETFs: SPY,QQQ,IWM,TLT,IEF,USO,JJC,UUP,FXE,GLD

Finance SPDR: SPY,XLF,WFC,JPM,BAC,C,AXP,BRK.B,USB,AIG,GS,MET
Tech SPDR: SPY,XLK,AAPL,GOOG,MSFT,IBM,T,VZ,ORCL,QCOM,CSCO,V
Industrials SPDR: SPY,XLI,GE,UTX,BA,UNP,MMM,HON,UPS,CAT,DHR,EMR
Consum Discret SPDR: SPY,XLY,CMCSA,AMZN,DIS,HD,MCD,FOXA,F,PCLN,TWX,NKE
Healthcare SPDR: SPY,XLV,JNJ,PFE,MRK,GILD,AMGN,BMY,ABBV,BIIB,UNH
Utilities SPDR: SPY,XLU,DUK,NEE,D,SO,EXC,AEP,SRE,PPL,PCG,PEG
Consum Stap SPDR: SPY,XLP,PG,KO,MO,WMT,CVS,PEP,MO,CL,MDLZ,WAG
Materials SPDR: SPY,XLB,DD,MON,DOW,PX,LYB,FCX,ECL,PPG,APD,IP
Energy SPDR: SPY,XLE,XOM,CVX,SLB,OXY,COP,EOG,PXD,HAL,APC,PSX

What are the Best Ways to View Advance-Decline Data?



There are several different ways of viewing advance-decline data and this article will highlight three of the most popular methods. In this example, we will look at different ways to analyze S&P 500 AD Percent ($SPXADP), which is advances less declines divided by total issues. For example, if 300 S&P 500 stocks advance and 200 decline, AD Percent would be +20% ((300 - 200)/500) = +100/500 = +.20 or +20%). This number is positive where there are more advances than declines, and negative when there are more declines. AD Percent is a breadth indicator that measures the degree of participation behind a price move. An advance with AD Percent above +70% reflects broad participation, while an advance with AD Percent near +10% shows narrow participation.

Now that we know how the indicator is calculated, let's look at three different chart variations for S&P 500 AD Percent ($SPXADP). The main window shows the AD Line, which is a cumulative measure of AD Percent. The AD Line rises when AD Percent is positive and falls when AD Percent is negative. A 50-day moving average was added as an overlay.

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Click this image for a live chart

The middle window shows AD Percent in raw format using the new "histogram" option, which is shown as the first indicator option below (1). Chartists can now see perpendicular up bars when AD Percent is positive and down bars when AD Percent is negative. The bottom window shows the 20-day EMA of AD Percent. I added AD Percent as an indicator using the "price" function and then set its as "invisible" using the "style" drop down menu, which is shown as the second indicator option (2). The moving average was then added as an indicator of this indicator. Notice how the 20-day EMA of AD Percent oscillates above and below the zero line like a momentum oscillator. StockCharts calculates AD Percent, AD Volume Percent and High-Low Percent for several major indices, the nine sectors SPDRs and Gold Miners ETF (click here for a list).

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How Can I Add Symbols from a CSV File to a ChartList?



Chartists can add symbols from a csv file in four easy steps. First, create a csv file using Excel, Numbers or another spreadsheet program. Place the symbols in the first column and the names in the second column. Save the file as a CSV file.

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Continue reading "How Can I Add Symbols from a CSV File to a ChartList? " »

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