My daily key levels for hundreds of stocks and ETF. Stay on the right side of the market and easily spot stocks that offer buy or sell opportunities today.
1. Key reversal levels for November 28, 2014.
Quick intro:
Full instructions are in the final pages of this PDF, here is the quick start info:
Key reversal levels can be used as:
* Trade entry levels. When a stock closes above its daily key reversal level it gives a buy signal and
turns to bullish mode on the next day.
* Stop-loss levels. To be used on a daily closing basis. If you are long a stock and it closes below its
daily key reversal level, then it is considered a sell signal.
The MoM indicator shows the current "mood" tendency of the stock based on a proprietary formula.
It is used to detect speculative buy opportunities in stocks that have become very oversold.
The buy and sell signals generated by the key levels are a "trend following" method. The signals
generated by MoM indicator are a "mean reversal" method. By combining both we have a hybrid
system.
The tables below gives the weekly(W) and daily Mode (green = bullish, red = bearish), the daily key
reversal level and the MoM. You can see how many days have passed since the last Buy or Sell
signal and the % change since that signal (blue = profitable and orange = under water). The next
column gives a strategy number (Str. #) which can be looked up in the list below the tables for
further details.
The action column gives quick info for trading:
* Buy, Sell, weak Buy (wBuy) or weak Sell (wSell) -> regular buy and sell signal based on the key
level.
* Speculative Buy (spBuy) -> MoM turning up, can give you a great entry point for stocks you want
to buy on weakness.
* Take profits (tP) -> get out here if you bought for a quick trade. Long term investors can still hold.
* Partial profits (pP) -> good chance to take some money off the table. Can always scale back in
(see: "Add").
* Add -> this is where you can add to positions if you are in for the long term.
* Add short (AddSh) -> good opportunity to add or initiate short positions.
* Watch (w) -> stock to watch, very close to key level. The key level tends to reject prices, which
can be used for special entry techniques (More on that later).
Tip: Yellow boxes in the "MoM" or "Days" column help you to spot where the action is. These are
stocks with momentum changes or with new buy or sell signals. Their "Str #" gives additional
details.
Further explanation and instructions for use can be found at the end of this PDF. There is also a
little FAQ.
Major indexes
Nov 27, 2014 Current W Mode Key (D) MoM (D) Days % Ch. Str. # Action
Nasdaq 4787.32 4610.68 5.88 24 7.35 1
S&P 500 2072.83 2015.57 5.99 24 6.21 1
Nikkei 17248.50 16519.43 7.42 18 9.05 2
24. XRAY 54.52 50.97 8.97 22 16.55 1
XRX 13.89 13.18 3.49 18 4.67 1
XYL 38.54 36.46 5.08 24 9.99 1
YHOO 51.93 47.99 6.85 26 22.42 2
YUM 76.75 72.82 7.84 18 7.01 1
ZION 28.89 28.62 -0.28 21 1.65 2 w
ZMH 111.63 108.73 1.56 26 9.61 17 Add
ZTS 44.67 40.65 8.67 23 22.05 2
Strategy numbers (Str. #)
Full list of strategies corresponding to the numbers given in the "Str. #" column:
#1: Fully Bullish, rallying. Stay Long.
#2: Bullish, stagnating. Market peaking or consolidating. Hold.
#3: Bearish, ongoing decline. Wait for daily MoM to turn back up.
#4: Bearish, trying to stage a rally. Daily MoM is continuing to go up and you can still do some
speculative buying as long as the stock is near a recent low.
#5: Bullish, rallying. Stay long.
#6: Weak Bullish, stagnating. Market peaking or consolidating. Cautious hold on remaining position
(if any).
#7: Bearish, ongoing decline. Wait for daily MoM to turn back up.
#8: Bearish, trying to stage a rally. Daily MoM continues to go up and you can still do some
speculative buying as long as the stock is near a recent low.
#9: Rallying. Hold.
#10: Recent rally is stagnating or reversing. Cautious hold on any remaining position.
#11: Fully Bearish, ongoing decline. Stay out (or short) and wait for buy signals.
#12: Bearish, stabilizing. Market trying to bottom out. Speculative buy as long as the stock is near a
recent low.
#13: Rallying. Hold.
#14: Recent rally is stagnating or reversing. Cautious hold on any remaining position.
#15: Bearish, ongoing decline. Stay out (or short) and wait for buy signals.
#16: Weak Bearish, stabilizing. Market trying to bottom out. Speculative buy as long as the stock is
near a recent low.
#17: Fully Bullish, rally resuming. Stay Long.
#18: Bullish, rally hesitating. Market peaking or consolidating. If the position shows a nice profit,
then you can sell half and keep the rest. If the position is breakeven or showing a small loss then it
is better to get out at this point.
#19: Bearish, decline resuming. Stay out and wait for daily MoM to turn back up.
#20: Bearish but trying to stage a rally. Daily MoM has turned up and you can do some speculative
buying as long as the stock is near a recent low.
#21: Bullish, rally resuming. Stay long.
#22: Weak bullish, rally stagnating. Market peaking or consolidating. If the position shows a nice
profit, then sell half and keep the rest with a stop-loss just under a recent low. If the position is
breakeven or showing a small loss then it is better to get out at this point.
#23: Bearish, decline resuming. Stay out and wait for daily MoM to turn back up.
25. #24: Bearish but trying to stage a rally. Daily MoM has turned up and you can do some speculative
buying as long as the stock is near a recent low.
#25: Rally resuming. Hold.
#26: Recent rally is stagnating or reversing and daily MoM has turned down. If you have any
position in this stock then it is better to get out and wait for a more favorable entry point.
#27: Fully Bearish, decline resuming. Another leg down appears to be starting. Stay out or go short.
#28: Bearish, stabilizing. Market trying to bottom out. Speculative buy as long as the stock is near a
recent low.
#29: Rally resuming. Hold.
#30: Recent rally is stagnating or reversing and daily MoM has turned down. If you have any
position in this stock then it is better to get out and wait for a more favorable entry point.
#31: Bearish, decline resuming. Another leg down appears to be starting. Stay out or go short.
#32: Bearish, stabilizing. Market trying to bottom out. Speculative buy as long as the stock is near a
recent low.
#33: Buy signal. Buy outright on the Open. Or use a buy limit order near the halfway point between
the current price and the daily key level if you want to try to get in a bit cheaper.
#34: Weak Buy signal. MoM keeps going down, which means this could be a fake out move.
Cautious Buy on next Open or wait a day to see if MoM turns up.
#35: Sell signal. Sell any remaining position at Open. This signal can be used to go short. Sell short
outright on the Open. Or use a sell limit order near the halfway point between the current price and
the daily key level (see table) if you want to try for a better entry point.
#36: Weak sell signal. MoM continues to go up, which indicates a possible whipsaw move. Sell or
put a stop-loss just below today's low. For short sellers this is a trade to avoid.
#37: Buy signal. Buy outright on the Open. Or use a buy limit order near the halfway point between
the current price and the daily key level if you want to try to get in a bit cheaper.
#38: Weak Buy signal. MoM keeps going down, which means this could be a fake out move. With
the weekly(W) trend bearish this is a trade to avoid.
#39: Sell signal. Sell remaining position at Open. This signal can be used to go short. Sell short
outright on today's Open. Or use a sell limit order near the halfway point between the current price
and the daily key level (see table) if you want to try for a better entry point.
#40: Weak sell signal. MoM continues to go up, which indicates a possible whipsaw move. Sell or
put a stop-loss just below today's low.
Trading styles:
* Conservative investors should go with the normal buy and sell signals (#33 - #40) only and can
negate the info about speculative buys and short selling. This is a trend following method, so you
will not buy at the bottom and there will be some “give-back” at the end of a trend. The aim is to
participate in the bulk of a move with a minimum of risk.
* Short selling can be done on signals #27, #31, #35 and #39. It is not for everybody. When you are
convinced the market (or a particular stock) is overvalued and ready for a drop, then you can use
these signals to go short. MoM turning down after a weak rally gives good entry points, that's what
we have in #27 and #31. Good chances also come along when a stock has been in bullish mode for
a long time with MoM cruising above +8 for extended periods. You can then look to go short on a
#35 signal after a double top or flat topping range. A good second chance to go short may appear
on a #39 signal. Profit (or loss) is to be taken when the next regular buy signal appears (#33, #34,
#37, #38).
* Speculative buying opportunities appear when MoM starts going up for a stock that has been in
26. bearish(red) mode for a while. This is the case on signals #4, #8, #12, #16, #20, #24, #28 and #32.
These signals can allow you to pick up stocks within days of a major low (especially with #28 and
#32), but some care needs to be taken. Try to buy near the recent low, and use a properly
positioned stop-loss, e.g. just below the recent low, because not all those speculative buys will
work. Keep losers small and let the profits run. You can take some partial profits when the stock
comes close to its daily key level and let the rest run for a regular buy if the stock breaks out above
the daily key level (which make it a normal buy trade per #33 or #37). Note: struggling companies
may never recover, so this method is best used on ETFs or on stocks of companies that are in good
financial shape.
The MoM indicator
The MoM indicator shows market momentum on a numeric scale between +10 and -10. You could
compare it to the Richter scale for earthquakes, or a market thermometer if you want.
Various levels in the MoM indicator correspond to market mood as follows:
* +8 to +10: very optimistic – euphoric
* +5 to +8: optimistic
* +3 to +5 : positive
* -3 to +3: neutral
* -3 to -5: negative
* -8 to -5: pessimistic
* -10 to -8: very pessimistic – depressed
Besides the level itself, we also pay attention to the direction. In a healthy bull market, the MoM will
be rising together with the market. When MoM starts going down in a bull market (green), it is a first
indication that the market may have peaked (or about to do so), and that’s when market mode sets
to light green. In a rising market you will typically find MoM hovering between +3 and +10. Market
pullbacks will generally end with MoM bottoming out in the neutral zone ( -3 to +3) before turning
back up. In a declining market you will typically find MoM hovering between -3 and -10. Market
rebounds will generally end with MoM peaking out in the neutral zone ( -3 to +3) before turning back
down.
Q & A
Q: Where can I find more information about these key levels and MoM indicator you use?
A: You can find more materials here: http://lunatictrader.wordpress.com/key-reversal-levels/. More
will be added in the near future as well as example trades.
Q: I am a fundamental investor, can I do anything with these key levels?
A: Well, even if you select stocks based on fundamentals it will make a difference when you buy
(sell) them. Better timing can make a big difference, even for a long term buy and hold investor. For
example if your analysis shows you that company XYZ is great value, then you can still wait until
the key reversal levels give a buy signal ( or a speculative buy) to get in. Just try and see whether it
improves your entries.
Q: Your predictions for yesterday didn't work very well. But your table always shows a lot of blue
(profits). Why should I believe this?
A: The key reversal levels are not a prediction, they are an approach to trading. All you can do is try
it in your own trading and see if it works. It will naturally take more than one day to see if a method
is good or not. You can also verify the "%Ch." numbers if you want. Just take the Open on the day
27. after the buy (sell) signal was given and calculate the change to date.
Q: A stock I own is already trading below its key reversal level intraday. So it will probably turn to
bearish mode tomorrow. Do I need to wait for the Open tomorrow to sell this stock?
A: If going into the close you see that one of your stocks is almost certain to close below the key
level then you can already sell it with a MOC (market on close) order. Sometimes this will give you a
slightly better exit than waiting another day.
Q: Do I need to take all buy signals in the list?
A: No. If for example IBM gives a buy signal but you do not believe in that company, then you just
skip that one. It is also possible that a stock jumps 20% on good news and is already too far above
the daily key level when the buy signal appears. In that case you can wait until the price comes
back to the daily key level to pick it up. So, that's where you can always use some discretion.
Q: Do I need to take all sell signals for stocks I own? What if I am sure my stock will recover soon?
A: If you intend to use these key reversals properly, then the answer is: yes, always sell when a
stock has closed below its daily key level. True, sometimes a stock will come right back after giving
a sell signal, but many more times that doesn't happen and the stock just keeps sinking for some
reason that you may not hear about until weeks later (and maybe 10% lower). Then you will be
happy if you sold on the key reversal sell signal. This is a discipline thing. Also remember, if the
stock happens to come right back then it will climb back above its key level and give a buy signal.
We can then just buy it right back. That would costs us a few %, but that's a small price to pay for
avoiding big losers.
Q: How many winners can I expect with this method?
A: It is better to ask how big the winners will be versus the losers. You may have only 40% winners
and still come out well ahead. You can always see in the table what kind of winners you can expect.
There are always stocks that show 10% or better profits (see % Ch.) if you had taken the latest buy
signal (or shorted the latest sell). If you stick to buying stocks that are only a few % above their daily
key levels when they give a buy signal then you will keep most of your losses small. A stock
crashing overnight is always possible, so proper diversification is always needed.
Q: If a stock crashes 30% and falls below the daily key reversal then it will give a Sell signal
tomorrow. That doesn't help me today and I do not want to suffer the risk of such big losses. What
to do?
A: A large adverse move overnight can never be ruled out. A well diversified portfolio will offer some
protection already. But you can use a disaster stop-loss, which I would put 5 or 10% below the key
reversal level. That will sometimes get you out of a crashing stock before the losses get even
bigger.
If you have questions, then you can contact me on my blog:
http://LunaticTrader.wordpress.com
On Twitter: https://twitter.com/lunatictrader1
Or find me on Scutify.com and ask away:
http://www.scutify.com/profiles/scutifier.aspx?q=LunaticTrader
Happy Trading,
Danny (aka LunaticTrader)