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Charts courtesy of stockcharts.com

Sunday, January 4, 2009

A Few Charts From The Relative Strength Scan

I was aking a look at the charts from this weekend's relative strenght scan, figuring I would find plenty of bullish patterns and soon to be breakouts, and surprisingly, i couldn't find any. There are many past breakouts that ar extended, there are some failed breakouts, and a few bases, but none that look very good. QSII is typical of what I am seeing. It appears to be forming a high handle, but the relative strength line is weakening rapidly. This is also heavily shorted, and that is reflected in the dimishing CMF.

WTR also looked good at first glance, but the relative strength is weakening here, CMF is positive but declining a bit. The one positve is the strong support at the 50dma.


ASGR may be the only good breakout setup I can find, but this is very thinly traded. Relative strength is ok, but it would be nice to see it get out to a new high. CMF shows a recent lack of seller, but the overall low volume does not suggest accumulation.

2 comments:

Anonymous said...

hey David.
Could you explain the diffence and how to read the cmf chart vs the volume bars to know wether the stock is in accumulation or distribution( I assume these terms mean that they are being bought/sold by instituions)
thanks Eddie

David said...

Hi Eddie,

Sorry about taking so long to respond, if you saw my post today you know I was without internet most of the day. William O'Neil, when discussing volume, looks not only at the volume bars, he also looks at the price bar (or candle) to see where the price closes in relation to the day's range. Most of the time, the heaviest volume comes in the last half hour of the day, and you can usually determine whether it was mostly buying or selling by checking where the close was. If near the top of the day's range, mostly buying, if near the bottom, mostly selling. Chaikin Money Flow (CMF) is an attempt at graphically representing this, and while not perfect (it can get fooled by extremely high volume days), it can give you a good idea whether or not money is going into the stock. Stockcharts.com has a good tutorial on it in the "chart school" section of the website.

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