To get help for the tick charts, which have certain features which differ from the time-based charts described herein, please use the Help link which can be found on the RTH Chart menu page. Here is a direct link to that RTH Chart Help Page.
Note: We've noticed that some browsers do not check the update time of the charts, so will reload an older chart from their local disk cache instead. If you get an old chart (identified by the date in the upper right corner), try holding down the SHIFT key while clicking the RELOAD button to force your browser to download another copy from the server. If the chart is still out of date, well ... what can we say ... we'll try to get it updated ASAP!
Light blue dashed lines which may appear to the right of the last price bar indicate support/resistance price points.
Moving Averages appear as lines tinted blue.
Linear Regression Line will appear as a straight yellow line on some charts (individual stock charts) or a straight black line (ETF Trader charts). This is a full data linear regression fit on the data. If the line is moving up, the overall trend is up); if the line is moving down, the overall trend is down.
J. Welles Wilder Jr. created this indicator. It is a good indication of trend when the red dots are paralleling price action. However, during non-trending phases, it will generate losses. See Wikipedia for additional information.
Line Break Indicator is an indicator which is either bearish or bullish at all times. When bearish, the indicator is shown as a down triangle; when bullish, it is shown as an up triangle. A position change is indicated when the market crosses over the current line break price and closes beyond it. The following chart illustrates a switch from bearish to bullish signal:
The current value of the line break indicator is shown in the upper right-hand corner of each chart:
Polylines (Polynomial Non-linear Trendlines) appear in various shades of color. The trendline table shown on the daily chart page shows the exact values these trendlines take on each day for 3 days starting with the current date.
The text shown within the leftmost column in the table indicates by matching color which trendline it is associated with. This text may be any of the following three types:
Up to 10 polylines may appear on any individual chart. Since moving averages are always a shade of blue, no polyline will appear bluish.
We have found that many markets will exhibit trending behavior not wholly explained by a simple straight (linear) trendline, but will tend to follow a curved (non-linear) trendline. These trendlines are constructed using three or more significant highs and/or lows. Longer-lasting trends tend to follow conventional straight lines. However, some significant market moves do take place along polylines.
Often, price moves to the trendlines will allow optimal trade entry and exit.
The method used to determine trend is based upon the article Timing is Everything (or at least one more thing to watch) by Alex Saitta in the September 1997 issue of Futures magazine (page 50). Non-trending areas are marked by red price bars, while bullish trends are identified by green price bars and bearish trends are painted in purple price bars. The bottom line: at least for the bond market, according to the author, breakout signals tend to be more profitable if the bond market has been in a non-trending mode for 22 or more trading days preceding the signal.
This is also likely to be the case for other markets as well (the length of the non-trending timeframe is likely to differ, however), so we've implemented the technique described in the article for all of the daily charts. Here's a very brief capsule description of what we did: we first construct a Moving Average Channel (MAC, not shown on the chart, which consists of two moving averages: a 10-day average of high prices and a 10-day average of low prices). When the market first closes above the MAC, a buy signal is generated. When the market first closes below the MAC, a sell signal is generated. If the profit from that theoretical trade is more than 0.5%, all of the price bars within that trade's timespan up to and including the preceding high or low (depending upon whether that trade's position was long or short, respectively) are considered trending and are painted green or purple; otherwise, that period is considered non-trending and is painted red.
Obviously, we skipped a lot of detail in this capsule summary. For a detailed description of the MAC and this technique, please refer to the September issue of Futures magazine. The author is a vice-president and technical analyst focusing on T-bonds at Salomon Brothers in New York.
Magic-T Theory was created by Terry Laundry. It works from the premise that markets spend an equal amount of time under accumulation and distribution. The centerpost of the T represents the time of transition from accumulation to distribution, generally corresponding to a buying opportunity as prices start rising from the low.
The right side of the T represents the end of rallies.
For more information about Magic T-Theory, read Terry Laundry's Blog.
Divergence between the last charted price (the current price) and all historical prices shown on the chart is shown by the shading on the particular historic timeframe being compared. When the current price is lower than a particular historical timeframe, but the money flow line is higher, the background for that historic timeframe will be shown as dark green, representing a condition of Bullish Divergence. When the current price is higher than a particular historic timeframe, but the money flow line is lower, the background for that historic timeframe will be shown as crimson, representing a condition of Bearish Divergence. Otherwise, when price and money flow are in the same direction, neither dark green nor crimson will be shown.
This has great value as a filter for trade signals generated by other systems. For example, let's say you have a BUY signal from another system or indicator, but the tick money flow shows considerable selling into the rally (in other words, a lot of red is showing) -- this indicates that the big money may be selling into the rally and it is not an opportune time to buy. Similarly, if a lot of green is showing, it is probably not a good idea to sell short.
Look for bullish or bearish divergences to indicate a significant change in trend for the index or sector. This indicator is either positive, meaning net accumulation, or negative, meaning net distribution. Positive readings on the indicator confirm an uptrend and negative readings a downtrend.
To aid divergence analysis, a band near the bottom of the top plot showing bullish divergence in green and bearish divergence in violet over various time periods will appear on charts showing Money Flow. The band shows very short term divergences at the bottom of the band, while longer term lookback periods move up the band. If there is no divergence for a particular lookback period, the background color appears for that lookback.
This is an indicator which is constructed by summing the up and down volumes of each stock which goes into a particular index and calculating an oscillator value for the whole index. We have volume oscillator charts on the Daily Volume Oscillator Charts page. All of the indices which have associated Volume Oscillators have names which end in VOLOSC. For instance, the SPX (S&P 500 Index) volume oscillator chart has a ticker named SPXVOLOSC.
For more information about the Magic T-Theory Volume Oscillator, read Terry Laundry's Blog.
Our volume oscillators are created using a slight variation of Terry's technique. Terry uses NYSE up and down volume as reported by MarketWatch.com to compute his volume oscillator for the NYSE. We look at each individual component stock within each index (or sector) and determine whether that stock closed above its opening price, or down from its opening price. If it closed up, we add its trading volume to the total up volume accumulator; otherwise, we add its trading volume to the total down volume accumulator. When we have finished processing all stocks for that day, we have two raw values: total up volume and total down volume for the day. We then apply Terry's volume oscillator formula to the numbers. We don't scale the numbers like Terry does for manual plotting simply because we don't manually plot it, we let the computer plot the oscillator for us.
See Pivot Points for information on pivot points.
Our bands are shown along with labels for the latest price datum. The label abbreviations refer to:
A change in direction of the moving average line often confirms that a trend change has taken place. This is indicated when the color of the moving average changes.
Look for divergences between price action and momentum studies to help confirm tops and bottoms. In addition, crossovers between the yellow and red/green lines are indicators as well: when the yellow crosses under the moving average line, this indicator is bearish; conversely, a crossing where the yellow line crosses above the moving average line is bullish.
BEARISH DIVERGENCE indicates that while higher highs in price were recorded, the indicator made a lower high. In this case, we would normally look for a top to be forming in the market and subsequent decline. So, we would be looking for a sell point.
If neither type of divergence is detected, the directionality of movement of the indicator determines whether BULLISH TREND or BEARISH TREND is indicated. Currently, the analysis is for direction of trend only. Strength of trend may be anywhere from weak to strong (no assessment is made of trend strength itself, only directionality).
Prior to the 21st Century, this indicator was computed using closing volume and price figures. Beginning in January 2000, however, the calculation is performed on individual, intraday quotes. Intraday figures are available using http://gamma.dhs.org/cgi-bin/show_oexdwcpr. The prior intraday values at 15-minute intervals for the last trading day are displayed using http://gamma.dhs.org/cgi-bin/show_oexdwcpr?hist=yes. As the discussion below indicates, when the ratio is "high" (above 2.0) it indicates overly-bullish sentiment (which may be considered "overbought"); when the ratio is "low" (below 0.5) it indicates overly-bearish sentiment (which may be considered "oversold"). However, during strong, trending markets, these extreme readings may only indicate a strong underlying trend, and thus must be considered to be useful only in conjunction with other indicators as confirmation. If the market is rallying, but coming off a deeply oversold level (based upon other technical and fundamental indicators), extremes in bullish sentiment will more likely mark the beginning of the move (for instance, 1995 saw very high bullish sentiment readings near the start of that massive uptrend).
On the other hand, if the market is in a trading range, these extreme levels of 2.0 and 0.5 tend to occur reasonably close to tops and bottoms, respectively, so may be of particular interest for short term trading. Another aspect useful for traders: as the market comes into a significant low, bullish divergence between price action and this indicator can appear. That is to say, while prices are moving to a new relative low, the indicator itself may be putting in a higher low as the more savvy traders turn bullish at the actual low. The opposite condition, bearish divergence, can occur at tops as well.
In general, in a bull market, extremes of bullishness tend to occur well ahead (about a week, in fact) of price tops, so bearish divergence is more pronounced at tops. In a bull market, trading lows tend to occur within a day or two of extremes of bearishness on this indicator. Since we haven't enough history to make any definitive statements about the behavior during bear markets, we won't claim the obverse, but it wouldn't surprise us if that were the case.
When plotted on the OEX daily price chart, this indicator will appear near the bottom margin of the price plot window. It will appear in three different colors: a pair of horizontal, white dotted lines mark the nominal "overbought" and "oversold" levels corresponding to ratios of 2.0 and 0.5; each day's ratio is plotted as an orange bar pointing either up or down from the neutral ratio of 1.0. Finally, a yellow line plots the centered 8-day moving average ratio for each day. Note that this is a centered moving average, which will lag actual price action by a half span (4 days). In order to make ratios symetrical about the neutral level, this plot is logarithmic (as is the price plot itself). Additional information about this indicator can be found here.
Triangles represent time ratio projections for turning points on the charts. Additional information about this indicator, as well as its appearance as rendered on the charts, can be found here.
