[EquisMetaStock Group] Re: Index & AD Line Divergence Indicator - Help

[pumrysh <no_reply@xxxxxxxxxxxxxxx>]

Tono,

I can suggest indicators all day long but you must understand how to use them first. 

The A/D line is a composite that must be made in the downloader. You may have a data provider who will furnish the info for you. Once you have that information you will be able to plot it and manipulate it as you see fit. An A/D index cannot be made without the composite data. 

So what other information is available. If you are getting the Index data then you can apply a stochastic or maybe even some of Wilder's directional indicators. The problem will be that with either of these approaches you will not see the daily advancing versus declining issues.

I think your approach is fine. Its a matter of whether you can obtain the data that you need. 



Preston

 

--- In equismetastock@xxxxxxxxxxxxxxx, Tono <tonmdn@xxx> wrote:
>
> Thanks again preston
> 
> I am looking at market breadth as a part of my entry & exit decision. The idea is to look for stage 1 and stage 2 for entry timing and stage 3 and stage 4 for exit timing by tightening stop loss point.
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> I am working on my own and have limitation in metastock formula programming so i try to get into this forum in hope finding someone that would help me to create indicator(s) that can identifying those market stages so i can use it for backtesting.
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> anyway it's nice to have your viewpoint that enrich my trading knowledge.
> 
> What are the other indicators on index that you could suggest?
> 
> Tono
> 
> --- On Tue, 1/19/10, pumrysh <no_reply@xxxxxxxxxxxxxxx> wrote:
> 
> From: pumrysh <no_reply@xxx>
> Subject: [EquisMetaStock Group] Re: Index & AD Line Divergence Indicator - Help
> To: equismetastock@xxxxxxxxxxxxxxx
> Date: Tuesday, January 19, 2010, 2:37 AM
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>       Tono,
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> There is a difference between the A/D Line and the A/D Index. Either way rising values of the advance/decline can be used to confirm the likelihood that an upward trend will continue. If the market is up but there are more declining issues than advancing ones, it's usually a sign that the market is losing its breadth and may be getting ready to change direction.
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> I'm not the one to be asking about divergence. 
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> As far as the zig zag goes, it is not a reliable indicator because of the variation in its last leg.
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> Looking at the pic that you sent March of 2009 was ready for a breakout. The A/D couldn't go much lower and the index prices were consolidating. It sounds like you have several partners. What were their thoughts? 
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> You should also look for other indicators that you could use on the index.
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> 
> Preston  
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> 
> --- In equismetastock@ yahoogroups. com, Tono <tonmdn@> wrote:
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> >
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> > Dear Preston,
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> > 
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> > Thanks for your valuable insight. 
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> > 
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> > How about using a percentage as a threshold in identify the divergence ie : 5% ,10 % and so on according to the historical volatility of the index. the same principle as used in zig zag or elliot wave system?
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> > What do you think about that idea?
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> > After all, we use this indicator for a first screening, we will look into the chart and other indicator for further confirmation.
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> > Thanks again
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> > Tono
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> > 
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> > --- On Mon, 1/18/10, pumrysh <no_reply@xxxxxxxxxx s.com> wrote:
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> > 
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> > From: pumrysh <no_reply@xxxxxxxxxx s.com>
> 
> > Subject: [EquisMetaStock Group] Re: Index & AD Line Divergence Indicator - Help
> 
> > To: equismetastock@ yahoogroups. com
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> > Date: Monday, January 18, 2010, 11:25 AM
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> >       Tono,
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> > I really have reservations about what you are asking.
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> > Here's why. What you have drawn looks nice but it is after the events have taken place. Notice that the A/D line is not a straight line...it goes up and down. The same holds true for your index. The best that you should expect is to use a smoothing method like a moving average. When you do this you will introduce lag meaning that the movement will be after the fact and not current. So basically you will gain nothing.
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> > I'm not saying that what you want can't be done, just that its going to require a lot of work.
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> > Preston
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> > --- In equismetastock@ yahoogroups. com, Tono <tonmdn@> wrote:
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> > > Dear all,� � �  
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> > > � � �  
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> > > Can anyone help me to create an indicator that show each stage of market as defined below :
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> > > � � � �  
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> > > Stage 1 : On a bottom, the Index line will stop downward move and move higher but the A/D Line will continue down. This indicates the start of a bull market.
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> > > Stage 2 : A/D Line and the Index going up , then market in stage 2
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> > > Stage 3� � �  : on stage 3 there should be a widening gap /divergence between the index and A/D lines, as the A/D Line loses momentum but Index line continue higher.
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> > > Stage 4 : A/D Line and the Index going down , then market in stage 4
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> > > and how to incorporate the above indicator in exploration of individual stock? � � �  
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> > > in example : I want to find stocks that have moving average golden cross but only when market are in stage 1 or 2 . �  
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> > > I have attached an image on this email and uploaded an image to EquisMetaStock Group under "Photo" section within album "Index & AD Line Divergence" for a picture� � �  
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> > > worth a thousand words.� � �  
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> > > Thanks in advance
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> > > Tono
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