Bearish Technical Indicators – Looking for some ideas?
I have been trading for about 8 years now but only in Bullish Markets. I am by all rights a short term Swing Trader or 5 to 10 day plays. I understand that there are no "holy grails" for trading but on the technical side of things is there a proven indicator or group of indicators that seem to work well. I have a back scanner program to test any ideas. I am only at this point in time looking for short side as I am very comfortable with the Long side. I have both Telechart and Stock-finder for technical analysis. Any tips worth back testing would be appreciated. Thanks in advance.
I look for the put call ratio to be very low and begin to rise. I also look for the new individual stock highs to peak and drop off while the market is still rising. A spike in volatility while the market is at new highs is the signal to get out now or go short.
What i use is a combination of indicators i use an to identify selling points i use an 8 day RSI>75 , Stochastic 8,3,3 >75, and a 10 day Money Flow Index (MFI) >70
Hope that helps some.
Since you are a swing trader maybe you’d like to swing trade on the short side. Scan for stocks trading below the 100- and 50-day moving averages with the MA lines moving downward.
I also use ADX (7) and Full STO for additional information and confirmation. I look for stocks that have an ADX over 25 with the line either moderating or rising with the -DI also above 25.
Then I look to see if the STO was recently above 80. The more recent the better.
I’ve included an example on my website of NWPX (via the link below) although it’s a stock that’s too thinly traded but it’s a good example of the strategy. The two green bars identify potential short entries.
Best of luck!
I was reading about an indicator on http://www.FuriousTees.com called the R-squared indicator which essentially tells you how much of a stock move can be explained by random movement or a trend. When this is combined with the linear regression slope, you can determine when a down move will have trend potential or be just a short pullback.
USE RSI >14, AVERAGE VOLUME, BREAKOUT LEVELS WITH VOLUME & ADX with DI+/ DI- crossover to Observe the strength of Trend. And most important use money management.
http://www.equityahead.com