Scroll down to see a list of Internet sites that will provide an education about Technical Indicators.
Technical indicators are used to measure factors relating to the market, sectors and individual stocks. The main stock indicators we need to know about are those that we may chart or add to our price charts, including trend indicators, oscillators and envelopes. Numbers such as Fibonacci, Pivot and Gann numbers, and chart patterns, such as gaps, head and shoulders, Elliott Waves are also important indicators. Learn about these using the search phrases Fibonacci, Using Pivots, Other Methods, Elliott Wave and Chart Patterns.
An education in measures of business and market sentiment and calculated market sentiment indicators was provided under the Sentiment search term. Calculated market indicators like momentum and put/call ratio can be applied at the individual stock level.
Baskets of stocks and major individual stocks can be used as indicators. When an individual stock is used as an indicator it is typically the leading and largest component of a sector that is chosen. They are used as indicators for baskets of like stocks. For example, Merrill Lynch (MER) for brokers, Newmont Mining (NEM) for gold. Particularly in earnings season an announcement by one company can have an effect on all the stocks in the same basket.
We have to remember that indicators on charts are just what they say they are – indicators. They are used to analyze market action from a different perspective, but there is no guarantee that prices are going to move in the direction indicated.
Indicators are typically divided into leading and lagging indicators. As may be expected leading indicators give more signals earlier than lagging indicators and can be useful as warnings of changes in price action. However, they produce a higher percentage of false signals, which increases the potential for losses. Lagging indicators are most effective in trending markets but, as the name suggests, are not the best at predicting direction changes. Moving averages and MACD are lagging indicators.
Amongst our major considerations when planning an investment is determining whether the market, the sector and the stock is trending or moving sideways in the timeframe that we are considering. History shows that trending occupies less than half the time, Trend indicators, oscillators and envelopes will help us determine that.
Typically when using charted indicators we are looking for the value, a divergence between the indicator trend and price action, or a crossover. We always need to examine indicators in multiple time frames and we need to seek confirmation when an indicator provides a signal. Many experts require 3 to 5 indicators to be giving the same signal before they take action. To use indicators well requires a good deal of experience.
No payment of any kind has been accepted for the inclusion of any Internet site below
The links below will take you to other sites. Investors Internet Inc. does not accept any responsibility for the content of any third party website.
When you have explored some of the sites below please give us your comments by sending an email to info@investorsinternet.com
http://www.stockcharts.com/ explains these indicators in its Chart School.
http://www.ord-oracle.com/ explains how to use the TICK in buy and sell signals. Most of the glossaries listed in the Introduction Section also have explanations of chart indicators.
That is a point to bear in mind when looking at the multiple indicators shown for any stock at http://www.stockconsultant.com,
http://www.prophet.net/ and
under Opinion at http://www.barchart.com.
http://www.wallstreetcourier.com/ has a useful 49-page booklet called “The E-Book of Technical Market Indicators” that covers advance-decline, market, short sales, sentiment and index indicators and can be downloaded.
http://www.technicalanalysissite.com/ also has explanations of more than 40 indicators.
http://www.equis.com/ provides online “Technical Analysis from A to Z” by Steven Achelis. It categorizes indicators into monetary, sentiment and momentum.
http://www.chartfilter.com/ not only has an explanation of almost 100 technical indicators but in its Signals section it lists clear buy/sell instructions on how to use about 20 of them. http://www.chartfilter.com/ also has a 90 page Technical Analysis Training Guide for download.
http://www.stockcharts.com/ does a good job with its explanation of a few dozen indicators in the Indicator Analysis section.
http://www.incrediblecharts.com/ has explanations of more than 50 indicators
http://www.trade10.com/ has explanations of more than 50 indicators.
http://www.market-harmonics.com/ has explanations of moving averages, stochastics, relative strength, Bollinger bands, MACD and Fibonacci indicators.
At the other end of the numbers scale http://www.thomhartle.com/ has an article on Indicators which addresses only the Chaikin Money Flow Indicator. Three other articles explain the importance of multiple time frames, the MACD histogram and the three keys to trading.
http://www.syncmt.com/ has articles by Carolyn Boroden explaining the use of the CCI (Commodity Channel Index) with Fibonacci numbers.
http://www.abg-analytics.com/ has useful advice on technical indicators and trading systems, and it has a free weekly newsletter which comprises a list of the current price and the values of several technical indicators for the stocks in the S&P100.
http://www.stock-charts-analysis.com/ is all about advance decline information. It provides tutorials and daily figures for the major exchanges, the Nasdaq 100 and the S&P 500.
Surprisingly, based on the name, http://www.technicalindicators.com/ does not contain education about technical indicators but provides market forecasts - based to some extent on technical indicators. Published by a private investor the site provides an informative collection of data about the markets, a summary of market conditions, and reasoned forecasts for the stock market, gold, silver and a few currencies.
Indexes and Benchmarks
The best known baskets of stocks used as indicators are the major market indexes – Dow Jones Industrial Average, S&P 500 (Standard and Poors 500), S&P 100, Nasdaq Composite, Nasdaq 100, and the Wilshire 5000 Total Market Index. Sector indexes include the Dow Jones Transportation Average, Dow Jones Utility Average, S&P MidCap 400, S&P SmallCap 600 and the Russell 2000 Index for small caps. Information about these indexes and many more indexes can be found at http://www.dowjones.com/ , http://www.djindexes.com/ , http://www.standardandpoors.com/ , http://www.nasdaq.com/ , http://www.nasdaqtrader.com/ , http://www.wilshire.com/ , and http://www.russell.com/ .
In the University section at http://www.invest1to1.com/ an article titled All About Benchmarks provides basic information about the major indexes – the Dow Jones Industrial Average, the S&P500, the Nasdaq Composite, the Russell 2000, the Wilshire 5000, and the MSCI EAFE (Morgan Stanley Capital International Europe, Australasia, Far East index).
For those of us looking to find out more about the popular indexes, like the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 http://www.indexarb.com/ and http://www.marketvolume.com/ are useful sites. They show the components and weighting of each index. http://www.indexarb.com/ shows them in chart form. It also shows the dividend yields for each index and analyzes the capitalization of the S&P500 and the Nasdaq 100.
Baskets of Stocks as Indicators
We may use our own baskets of stocks or individual stocks as indicators. http://www.onechicago.com/ in its analytics section allows us to create our own baskets or to select any of the 15 Dow Jones microsector indexes listed.
In the past http://www.undergroundtrader.com/ has gone further than just identifying baskets of stocks by adding tiers to the baskets. Jay Yu of http://www.undergroundtrader.com/ says that when a Tier 1 stock makes a strong move it is an indicator that the next tier down will soon make a move and that will affect the next tier down, and so on. When the fourth tier starts to run it is often the sign of a peak. He suggested a number of baskets worth watching. Note that the make-up of the baskets is dynamic as the fortunes and business of the companies change with time.
Back
