A Short-Term Buy Signal For The DJIA by John Toombs
ARTICLE SYNOPSIS ...A Short-Term Buy Signal For The DJIA by John Toombs
Buying the first retreat in prices following a strong move up in the Dow Jones Industrial Average (DJIA) is often profitable. Three questions are involved in doing so, however. What constitutes a ""strong move up""? Then should you buy? When should you close the position?
All three questions can be answered by using a slow version of the 20-day stochastic oscillator. Since September 1984 there have been 20 signals, almost four a year. Nineteen have been winners and only one a loser.
The stochastic oscillator, with its scale of zero to 100...