Originally Posted by aznaro8
Let's see if I understand it better with the HGSI chart.http://stockcharts.com/h-sc/ui?s=HGS...d=p50626236724
Gapped down March 9th, a couple of bottom bounces thereafter. Around March 25th or so PPO crossed and started trending up and had some nice green days before pulling back to 80 cent support. Breakout occurs April 13th. My question is at what point do you usually suggest to start looking for a position? Personally I like getting in just as the MACD/PPO is about to cross over and set a tight stop at support, but going off this chart that looks like it was not the breakout. If you were to have bought in then and held onto the breakout, may have been stopped out when it hit 75 cents on that pullback on the 4th of April depending on how tightly the stops were set.
Hope you don't mind teaching me your methods! Thanks.
First, your assessment is correct; the only thing I would add is the -DI pinch that occurred ~ May 1st. Look at this link and notice how the -DI line on the top ADX pinches against the +DI line on the bottom ADX. That's a sell signal and as you can see, it's a good time to exit.http://stockcharts.com/h-sc/ui?s=HGS...d=p32245211052
In regards to the latter part of your post, I've been trying to determine exactly how effective the 10EMA is as a buy signal or stop point. It works great for weekly pinchers but for the daily pinchers, I don't like it. It's a bit of a gamble since I don't have real-time level 2 most of the time, but I'm leaning towards just watching these setups for a volume spike and jumping in (as long as the PPO is bullish and there is divergence between the PPO/ADX). Hopefully, I'll post how that works out soon. I don't hold these very long due to the total disregard of fundamentals, so I will always exit on either a daily or intraday -DI pinch. I exit any setup when a -DI pinch occurs.
It's hard for me to comment on stops; I use mental stops and alerts for penny stocks because they're so volatile. I restrict the size of these positions based on volume and other factors, but I can pretty much lose all of these positions and it won't really hurt my capital too much. You just have to figure out what works best for you.