Mike,
Here’s an answer to your question about my newest chart template, how to build it, and how one might use it.
BarChart offers an ‘indicator’–they call them ‘studies’-- called the TTM Squeeze, whose construction and intended use is well covered in StockChart’s Chart School.
Glance through that article if you wish. But the fastest way to understand what any indicator might do that might be useful is plot it and then throw a couple dozen stocks at it (drawn from a wide variety of industries and market conditions) and then watch how well it identifies the turning points in the trend. If the indicator mostly gets things right, then tweak it to see if the signaling can be made crisper. In the case of the TTM Squeeze indicator, I saw that the cross-overs were pretty good. But I hated the color scheme, and I didn’t see any need for the clutter created by the dots.
Rather than the default purples, blues, and pinks, this is what made sense to me. (I discovered later this is the color scheme TOS uses.)
- If the bars were positive --meaning, above the midline-- and rising, then paint them ‘green’
- If positive and falling, then ‘yellow’.
- If negative and falling, then ‘red’.
- If negative but rising, then ‘orange’.
I kept the default settings for the Bollinger and Keltner bands and the ‘Momentum’ lookback, but turned off the dots.
The main panel is just HA bars with Hi/Lo flags turned on as well as Divs plotted. Here’s an example where the template kills it, getting into the trend nearly as fast as is reasonable to expect from EOD trading.
What do you see? A Lo flag is planted, then ‘red’ bar, ‘red’ bar, then a 'green one. Note that the second red bar doesn’t print lower than the flagged low. Said another way, ‘Support’ was retested and held. That’s Bullish! Next, what’s the trend with the TTM bars? The bars turned from ‘red’ to ‘orange’ and 'orange is sticking. In short, price action is asking, “What else do you need? Should I ring a bell?”
But what this template is really, really good for is making snap decisions about whether the chart is worth digging into further, such as is often the case when slamming through a couple hundred charts when you’re in Flip Charts mode at BarChart.
“One second. Two seconds. Yea or Nay? Next chart.” Now, some specifics.
If the HA bars are ‘green’ AND the TTM bars are also ‘green’, you can assume you’re looking at a strong trend that you should have gotten onboard as it began.
Once a Hi flag is planted, Quill’s rules kick in. If the next HA bar is green AND the TTM is green, you can Hold. But if the TTM has turned a warning ‘yellow’, be ready to get out. If the next HA bar is ‘red’, then Quill has told you what to do. Ditto for entries. Use his rules.
In short, the template is merely a tweak to Quill’s Simple Simon Sez system that adds some early warnings. It doesn’t change the essentials of his system, nor does it prevent one from occasionally getting clobbered, as happened in the following chart. However, that situation could have been mitigated if one had been trailing a stop, which should always be done in the late Stage Three market we’re now in.
Charlie
