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Preston,
I appreciate the warning on using divergence signals.
What you wrote is true in most of the charts I have
seen, and I agree with the opinion that it should be
used as a warning indicator, but with another trigger
for sell...like a 30-Day Weighted MA or a 30 Week
Weighted MA. Then again, divergence may not be useful
as the warning can go on for weeks or months before
the final pop.
But it seemed to work rather well in picking
temporarly bottoms..like on 9th Oct 2002 for DJI. The
divergence in the Stoch Momentum Index for DJI (as
well as in IXIC in Oct 2002 told of the BUY signal for
the impending bull run that lasted for 8 weeks.
Maybe it is probably due to these reasons, there are
not many divergence formulas out there in the
internet.
Can you name the hardcore TA websites you mentioned
for the benefit of those who are new?
Alex
--- pumrysh <no_reply@xxxxxxxxxxxxxxx> wrote:
> Alex,
>
> Some of the more hardcore Metastock TA sites have
> developed
> divergence explorations using various methods. Some
> work well and
> some do not. Divergence is nothing more than a
> weakening of momentum.
> During this time price will continue to rise while
> the momentum
> indicator will show successively lower highs. It can
> be a leading
> indicator of trend change. According to Thom Hartle
> though in a
> recent Active Trader magazine article, "Experienced
> traders know the
> RSI will repeatedly diverge from price during
> sustained uptrends or
> downtrends before eventually making the final top or
>
> bottom...essentually giving one false reversal
> signal after another."
>
> If you are going to use a divergence indicator you
> must know when you
> are simply loosing momentum and when reversal
> momentum has gained
> enough to signify a trend change. Options traders
> can use divergence
> to their advantage, if they are aware of these
> momentum
> differences.
>
> Just to give you an idea of how others were
> determining divergence,
> most were using peak/trough, HHV/LLV, and
> correlation.
>
>
> Preston
>
>
> --- In equismetastock@xxxxxxxxxxxxxxx, Alex Tan
> <bt_alex_tty@xxxx>
> wrote:
> > Folks,
> >
> > Can we search via stock exploration for divergence
> in
> > MACD Histogram, Stochastic or Stoch momentum index
> or
> > Force Index in Metastock's explorer?
> >
> > I have not seen any formulas on the website for
> these
> > kind of explorations. Has anyone seen this or have
> > used it before?
> >
> > Alex
>
>
>
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