Stochastics Buy Signals

[Simianer@xxxxxxxxxxx (Simianer)]

Hi all,

i have been following the list for about 7 months, now i decided to send my first 
contribution to share some ideas with you (and may be get some feedback).

Trading the stochastic seems to be not very common. I developed a system based on it to find 
promising stocks, that works quite profitable - at least on the long side.

Iīm using the following stochastic-template:

%K = 5/3, 15/9 and 25/18, all with %D = 3

Then i search for shares with the %K=25 crossing above its %D. This should happen below the 
oversold-level of 20, or at least below 50.
At the same time the 15/9-stochastic should be in an uptrend and ahead of the 25/18.
The 5/3-stochastic should also be climbing and have the highest value of all.

These are the conditions for an exploration. The stocks meeting these conditions will be 
analysed with other indicators (iīm using mainly ROC, Stochastic RSI, MACD, KST ).

Sometimes you get a buy signal of two stochastics, but the third doesnīt fit.
In this case wait, until all three turn to the same (upward) direction.
This very often indicates the best point to buy after a last downward move.

One very good example i got from my yesterdays exploration:  Novell.

At June 26, Novell saw itīs lowest value of the last 5 and a half years ($6.60).
June 30, the stochastic 25/18 had a crossover (value: 17), but the 15/9 was even lower (14).

Novell moved up to $ 7.50 before falling back to 6.70. Then it built a bottom before 
starting a climb again. Friday it close at 7.12, producing the awaited second crossover of 
the 18/9-stochastic. 
Now all three stochastics are pointing upward and on most other indicators you can find 
bullish divergences and trendline-breaks.

I will buy tomorrow some Novell at the german market, and if the resistance line at about 
7.15 gets broken, i will continue buying. 
My stop will be at 6.80, where you can find the support-line of the present up-move.


Now itīs your turn, to give some criticism, suggestions for improvement or any other 
feedback!

   Greetings from germany
    
  Thomas