New Posts: 001 - FINALLY!

CHANNEL CHALLENGES for
TECHNICAL ANALYSTS

is

REBORN AGAIN at last!!

I sometimes thought I might never be in a position to begin this blog again, but now, ready or not, I must relaunch it!  A recent car accident wherein I or my wife could have been seriously injured convinced me I should not wait any longer.

I am starting with what I consider to be inadequate preparation, so please forgive me if you find this blog somewhat clumsy and uncoordinated.  Please forgive me if my grammar and spelling are not quite right, too.  I will try to edit and correct as needed, including errors I may discover in my old posts.

Click on each chart image to view enlarged in a new window.

General Motors (GM)



General Motors, showing DCB pattern,
with some commentary.

As I began working with MetaStock again, after my upgrade to the End-of-Day version of MetaStock 13, I grabbed a handful of stocks and indexes to begin charting.  General Motors (GM) grabbed my interest right away, as it seemed to be showing signs of a Dead Cat Bounce (DCB).  I have a close cousin, who is a good friend.  One-day I sent her a copy of my chart, just to see what her reaction would be.  Her response was a good indication that she doesn't trade or follow the stock market much.  She did want an explanation, though, so I sent her this first chart with some comments to help her understand it.

You can see my "paper" Short position started in the chart at the left.  I decided I would Short 1000 paper-shares of the stock.  (I currently have no real-world funds to apply to trading, so paper-trading is all I can do for now.)

Did not close outside FenceLine

Will GM drop this far?

On the left, I point out that the short-term Bullish recovery (on 10/06/2014) did not close above the FenceLine Channel, giving me confidence that the Short position was still valid.

I needed to estimate how far GM might drop, if the pattern were to continue developing.  I measured the distance from the peak (where the red-line starts in my chart at the left), to the bottom-line of the ERRC.  I plotted this distance in the chart at the right with the orange line that drops well below the current prices, showing a Short position would have some good potential. If my drop estimate is accurate, it could fall to $28.00, but could take a week or two to do so.


How My Short Position Has Gone So Far

As of 10/17/2014, my "raw profits" from this short position (in paper-shares) on GM are quite encouraging.  See my spreadsheet charts at the right.

This does not mean that charts using ERRCs and TW-Channels will always go your way, but I find them very helpful when support and resistance in the area of the current price needs to be evaluated.



GM and FORD Short-term Longs

As I was watching GM, I noted Ford (F) getting very similar signals from my Expert. Waiting until both hit support that warranted the buy signal, I "bought" 1000 paper-shares of both.  My Short position in GM is still in play, but I thought I'd take a little profit from what is likely to be a short-term Bullish move to the next ERRC line above the current price.  The comparison chart at the left is as of 10/17/2014.




Update:  GM and F Longs Closed, Short Study Continues

Sold both on the Open Friday

NEW!  UPDATED CHART OF
MY GM SHORT POSITION

On Thursday, 10/23/14, I opted to close both my long positions on GM and F.  GM has some bad news that caused a large black candle, and since I felt Ford would mimic GM, I opted to close my positions on both on the Open the next day.  I ended up taking profit from both.  Meanwhile my Short Position on GM continues, as seen in the chart at the right.

With the Start Date (SD) and End Date (ED) for each
of these TW-Channels, you could recreate them
on your own General Motors (GM) chart.

Do you have a chart on which you'd like me to position TW-Channels for you?

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ARE YOU NEW TO THIS BLOG?  WELCOME!!

If you are new to Channel Challenges for Technical Analysts, I welcome you, and would be glad to get to know you and how you found my site.  To make the most of what I offer, I suggest you read at least some of my earlier posts to gain a basic understanding of my methods.  Of course, reading all my posts, in order, would make sense, but reading those I list below will give you an idea of what has gone before, and provide a good foundation for future learning.

Post 001: "Channel Challenges for Technical Analysts Reborn" introduces me, my methods, and why I began my blog.  It mentions the ERRC Color Coder Expert that I initially used in my charts.  Unfortunately, over the years, the original version's code was lost as I sought to improve upon it. Its replacement, which is under development, will not only color-code the Over-Bought (OB) and Over-Sold (OS) candles to help place the ERRCs, but also provide various other feedback on the state of the chart.  Buy/Sell Signals, Bullish/Bearish Conditions, Volume Greater than Average indications, and even Commentary are my intent.  I will make this Expert available for a fee.

Post 004: "How to Draw ERRCs and TeamWork Channels" is a good basic tutorial on how to create TW Channels, beginning with placing an accurate ERRC, following up with placing Standard Error Channels (Std-Err Channels), and/or Standard Deviation Channels (Std-Dev Channels), as needed.  Note, I almost never use Std-Dev Channels in my TW-Channels now, unless an obvious support/resistance location is noted in my chart which a Std-Err Channel doesn't "explain".

Post 005: "TeamWork Channels On the Nasdaq 100 Index" gives a good illustration of using TW-Channels on Index charts, in this case the Nasdaq 100 Index.  It also provides the Start Dates (SD) and End Dates (ED) of the channels in the chart, so you can reproduce them in your own.  It then gives samples of how the TW-Channels, drawn on trends way in the past, chart areas of Support and Resistance in the more current prices, essentially proving their value.

Post 006: "The Fenceline & Overall TW-Channels' Utility" introduces how to draw FenceLine Channels, and Overall TW-Channels, and gives you an idea of why you may wish to include them in your charts.

Post 007:  "Why do TW-Channels Work?" answers this question in a rather technical way, but there is a paragraph in the middle that sums up my opinion as to why they work.  After re-reading it just now, I realize it could be wording a bit better, so I'll probably expand on it in a future post.

Post 008:  "Are Channels Dynamic?" points out that ERRCs, TW-Channels, and all the other channels I use are definitely not Dynamic.  In technical charting, this term refers to the tendency of an indicator to change its value, and thus its position on the chart, with any new data point that comes in.  I would be a pretty poor user of MetaStock, and a terrible Customer Support Technician if I every proposed that you use any kind of Dynamic indicator in your charts.

Post 009:  "TeamWork Channel Drawbacks" seeks to point out aspects of ERRCs, TW-Channels, etc., that are not, shall we say, optimal?  Every indicator I've ever seen has some kind of drawback, including my channels tools.  This post gives a good idea of what they are, but also proposes ways that these could be eliminated or at least reduced, with the help of MetaStock's programmers.

Post 011:  "WANTED:  A TeamWork Channel Tool" is my first effort to propose how a tool could be designed in MetaStock to facilitate and enhance the use of TeamWork Channels.  These are effectively the collective form of using ERRCs, Std-Err Channels, Std-Dev Channels, and/or FenceLine Channels, all of which use the same SD and ED for any given TeamWork Channel's parts.  Altough my current methods with them work, the tool I describe could take most of the tedium of the task away, and have the added benefit of reducing the level of memory-usage need in MetaStock to produce TeamWork Channels in charts, by eliminating the lines that are not needed in the chart.  Since I wrote that post, more ideas on how and why this tool should be built have occurred to me.  I will write a post specifically about this issue again in the near future.

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Topics for Future Discussion

I Just Enrolled in TD AmeriTrade's 
thinkorswim
Virtual Trading Program

Why I believe Intraday Traders can benefit 
from using TW-Channels in Daily Charts!

Enhancements to My Proposed TW-Channel Tool

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