Tag Archive | "indicator"

This Technical Indicator Predicted the Recent Market Crash


The recent stock-market crash caught most traders by surprise. True enough, many fundamental analysts and economists have long-been warning about the market being overdue for a correction, but none of them could say exactly when it was going to happen. Well, all of the eggheads were outsmarted by a simple technical indicator — the PPO, or Percentage Price Oscillator.

PPO is a lot like MACD. In fact, the Absolute Price Oscillator (APO) is essentially MACD on a slightly different scale. But PPO takes things to another level and has certain advantages over MACD. So with that in mind, is MACD obsolete? Maybe. MACD didn’t do a lot to predict the market’s recent crash, while PPO did.

But what exactly is PPO and how do you use it? Read on and watch the video to find out.

In this episode, you’ll learn:

– All about Price Oscillators and the difference between APO/MACD and PPO (0:44)

– How APO and PPO are calculated (1:44)

– The advantages of using PPO instead of APO or MACD (1:46)

– How to use and interpret a PPO histogram (2:27)

The video also looks at how PPO predicted the crash of early May 2010, and shows you how to use PPO with stockcharts.com.

In conclusion, the recent stock market crash should give PPO some extra credibility, as the indicator clearly predicted the crash. PPO is a lot like MACD, but has certain advantages discussed in this video. And on top of everything else, it’s easy to use — just follow the steps in this video.

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

P.S. Next week we’ll look Hanging Men and Hammers — two single-day candlestick formations that accurately predict reversals. See you then!

Episode 50 – This Technical Indicator Predicted the Recent Market Crash

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How to Use the OBV Momentum Indicator


Babe Ruth hit 714 home runs without steroids or modern training methods. NASA put men on the moon in 1969, when computers were the size of auditoriums. And heck, we still don’t really know how the Egyptians built the pyramids.

The point of all this is that sometimes “old fashioned” ways of doing things are best. Warren Buffett built his investment empire that way, and Jesse Livermore — perhaps the greatest stock trader of all time — never used any calculation that couldn’t be done by hand.

So with all this in mind, this week’s episode is about On-Balance Volume, or OBV, which is a simple but effective momentum indicator that helps predict future price movements. It was invented in 1963 — six years before the moon landing — and yet scores of successful traders still swear by it. Watch this video to find out why.

In this episode, you’ll learn:

– The “big idea” behind OBV — this is crucial! (1:03)

– How OBV is calculated (1:22)

– What critics cite as the limitations of OBV (2:28)

– How to add OBV to your custom stock charts (3:25)

We also take an in-depth look at a real stock chart with an OBV overlay so you can see how it relates to and predicts price movements.

OBV may be simple, but that doesn’t mean it doesn’t work. One problem with modern traders is that they over-analyze things and rely too heavily on super-complex computer models. Why not go with what’s proven? And that’s OBV.

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

P.S. Next week we’ll look at Engulfing Lines. These are bullish and bearish reversal patterns on candlestick charts that are easy to spot — if you know how to look!

Episode 48 – How to Use the OBV Momentum Indicator

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How to Use the Accumulation/Distribution Momentum Indicator


Episode 37 – How to Use the Accumulation/Distribution Momentum Indicator

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The Chaikin Money Flow indicator


In Episode 37, we looked at the concept of Accumulation/Distribution. Now that you’ve had time to digest those lessons, we’re ready to take things to the next level with Chaikin Money Flow (CMF).

What is Chaikin Money Flow? It’s a statistic invented by the legendary Mark Chaikin. The formula takes the cumulative total of x days worth of Accumulation/Distribution line values, and divides THAT sum by the sum of x days worth of volume numbers. This gives a moving average of volume-adjusted Accumulation/Distribution values, which provides more accuracy than just a single day’s line value by itself.

But how do you use CMF? And where can you find the data? Those questions, and more, are answered in this episode.

In this episode, you’ll learn:

– All about Accumulation/Distribution — again — in this concise but informative review (0:32)

– Exactly how CMF is calculated and what a particular result, positive or negative, means (1:29)

– Three sure-fire signs of accumulation in a stocks — which can be applied in reverse for signs of distribution (1:59)

– How and where to find customizable CMF underlays to use on your charts (2:52)

We also take an in-depth look at a real stock chart with a CMF underlay, and show you exactly how you can apply CMF studies to your own charts, with sample screen shots.

CMF is a non-trend following volume indicator. It measures buying or selling pressure. In order to increase CMF’s predictive power, it must be used in conjunction with other technical indicators. Which ones? Watch this episode to find out!

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

P.S. Next week I’ll show you how to trade the Triple Bottom chart formation, a long-term bullish reversal pattern. See you next week!

Episode 42 – The Chaikin Money Flow indicator

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cXVpY2tpbnZlc3QubmV0L3dwL3dwLWNvbnRlbnQvd29vX3VwbG9hZHMvNC1xLmpwZyI7aTozO3M6NjE6Imh0dHA6Ly9xdWlja2ludmVzdC5uZXQvd3Avd3AtY29udGVudC93b29fdXBsb2Fkcy8zLXFpbG9nby5qcGciO308L2xpPjxsaT48c3Ryb25nPndvb192aWRlb19jYXRlZ29yeTwvc3Ryb25nPiAtIFNlbGVjdCBhIGNhdGVnb3J5OjwvbGk+PC91bD4=