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Purpose of Stock Charts
A stock chart provides a visual representation of the price movement of a stock in time increments over a time duration. This is historical information. Nothing in the past can predict exactly what will happen in the future, but there will be clues. Ultimately, we will use this historical price data to calculate the most likely direction of price movement and the relative strength of the movement. For a detailed explanation of how to recognize buy and sell signals, see our article "How We Trade Stocks" on this
website.
Price Direction
An average price can be calculated for any stock over any time frame. We use averages for two different time ranges. This provides for DOUBLE AVERAGE CROSSOVER as a way to determine the direction of price movement. Averages move through stages of upturn and downturn that can be seen on the top band of the chart. The best opportunities for purchasing a stock are when its price is moving in an upward direction and crosses up through the other average. The stock is sold when price falls down through the other average.
Support and Resistance Lines
First of all, support is resistance and vice versa. It all depends on perspective. We draw vertical support resistance lines on the top band dynamically, as they occur. They are not deduced from backtesting. We use the same formula to calculate these lines that the major financial institutions do. A stock's price WILL be affected as it moves through a support-resistance line, even months later. They cannot be ignored. A very successful trading
strategy is to buy after a stock has fallen through a support resistance line and then recovered its long term trend line (Blue).
Price Strength of Movement
All stocks have a trading range over a period of time. On any given day, a stock will be trading at some percentage of its most recent trading range. Top of the range is 100%, the bottom is 0%. This moving percentage is known as MOMENTUM OSCILLATION and is shown in the middle band of the chart. A standard trading strategy is to buy when a stock moves up from around 15% and sell when the stock falls through 85%. Bear in mind that the move from 15% to 85% is relative to the prior trading range. Actual price movement may be quite small. Also consider that when a stock's price falls, it becomes less volatile. There is less momentum below 50 than above 50.
Keep the Odds on Your Side
You can dramatically improve your chances for success by keeping the odds on your side. Wait until the averages are moving in the right direction for success. Use the stochastic to confirm the average cross over and vice versa. Conserve your capital and don't sit in a position when the numbers are moving against you. Don't try to guess exact bottoms and tops.
Price Quotations for the Charts
When you request a stock chart display, required historical price quotations are obtained dynamically over the internet from public stock quotation service companies. Your internet service must be
functioning in order to display stock charts. Price quotation companies update stock prices every sixty seconds while the stock exchanges are open, and make them available on a twenty minute delayed basis. You may, therefore, obtain continuous price quotations beginning twenty minutes after the exchanges open until 20 minutes after the exchanges close. On days when the exchanges do not open, price quotations represent the last closing price.
Chart Any Stock
When you invoke one of our stock charting programs, you may request a chart for any stock symbol for which a historical quotation service is provided. Enter the symbol in the box in the screen upper left and click on the show button in the upper right. It is not uncommon to receive "Internet Time Out" errors when trying to retrieve an historic price quotation. When this happens, just click on the Show Button to continue.
Create Your Own Portfolio of Stocks
You may, by creating your 'My Stocks' portfolio, create an individualized list of stocks to monitor. Create your portfolio by using the My Stocks option under Administration. To add stocks, click on NEW, enter your symbol and price (optional) and then click CHECK and ADD.
Choose One of Our Lists
In the drop down box of stock lists in the upper right corner of the charting programs we have offered up many lists for your consideration. These include some standard groupings such as the Dow Jones stocks and the NASDAQ 100 stocks. There are also lists of stocks as recommended by premium stock selection services. These often change on a daily basis. Finally, we throw in a few lists produced by our daily computer analysis runs. These are intended to save you some time in locating stocks that are moving through important trading cycles. After you have selected a list, the first chart will appear. You may proceed stock to stock through the list by using the Next Stock button and Prev Stock button found in the lower right.
Check for News
After you have viewed a chart for a stock symbol, you can check for news by clicking on the News button in the upper right. This will invoke a new screen and take you to Zack's news site for the selected stock. Their COMPANY REPORTS section offers their current buy-sell rating for the stock.
Structure of the Charts
Stock chart displays are presented in eight bands, or layers, of information and functionality.
The Top Bar
The top bar allows you to select a stock list, select an individual stock within a list or enter a stock symbol and press the Show button for a specific view. Yield% displays the current yield for applicable stocks. The News button will take you out to the Zacks web site for stock news, analysis and recommendations.
Price Graph
Historical price movement is shown vertically, on the Y axis, with a price legend on the right vertical axis. Our standard time increment is one trading day, and is expressed horizontally, on the X axis, with a date legend on the top horizontal axis. For duration, we offer six-month and 12-month charts. Depending on the type of price display selected, you will see bars, trends or support-resistance information.
Volume Ticks
Below the green reversal bar are the volume ticks. These red and blue symbols appear on days when trading volume is significant (has exceeded 125% of the stock's 5-day moving average of volume). Red ticks indicate down days on significant trading volume. Blue ticks indicate up days on above significant trading volume.
Red Momentum Windows
This area contains the blue and black momentum oscillation lines and the red momentum windows. Red Momentum windows represent periods of severe overselling in the stock. Price momentum is shown by the black and blue momentum lines. The top dotted
blue line represents the 85% momentum band. The bottom dotted blue line represents the 15% momentum band. The dotted blue line in the center represents the 50% line for momentum.
A BUY SIGNAL is generated when both the blue and black momentum lines move up through 15 after a red window.
A SELL SIGNAL is generated when both the blue and black momentum lines fall below 85.
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Trading Volume
Trading volume for the stock is shown as a vertical blue bar for up days, and a vertical red bar for down days. A five day average volume for the stock is shown as a black line across the tops. The upper green line shows the "Erickson Constant" line at 125% of average volume, a statistically significant increase.
The Price Line
In the center of this area, the most recent Open, High, Low and Close prices are displayed. These are as retrieved from the quotation service. The stock symbol and its change in price since the previous day are shown in the lower right. Positive changes are shown in black, negative changes are shown in red.
You may click on any vertical price bar and see closing prices for that date. Historic prices will be shown in a gray bar on the price line. To restore the original prices, click the Show button.
The Bottom Bar
The End Date entry field allows you to instruct the price graphing to end with the date specified. Using the +1 Day and -1 Day buttons allows you to move the chart display forward or backward one day at a time. If you are in the 'My Stocks' list and have recorded a purchase price for a stock, Performance will display your performance percentage for that stock to date. There are three display choices for prices and trends: bars, price ranges and trends only. You may select any, all or none. You may move forward and backward through a stock list by using the Prev Stk and Next Stk buttons.
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