Sunday, September 6, 2009

Using MACD-H to find extreme shakeout

Refining the 4-red-1-green rule to find situations where an uptrending stock has been sold off enough to shakeout the weaker holders.

1) Bull market. Stock in uptrend.
2) Recent sharp fall in price, usually several black candles - to shakeout the weaker players.
3) MACD-H is at its lowest point since the start of the rally/uptrend, signalling the severity of the shakeout.
4) When it turns green, hopefully the shakeout is over and stock can shoot up now that the weaker holders are gone.

Past examples:

CDL Hospitality (start Aug):

SATS (start Aug):

The current selloff is caused by SIA shareholders selling - should I play it now? Such abnormal selling may be distorting the chart.


Current Examples:

See Hup Seng:

Straits Asia:

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