One of my industrial plant inward progress is tracking the publish of NYSE stocks each twenty-four hours that give purchase signals as well as sell signals across unlike technical indicators. Above are charts for NYSE stocks giving purchase vs. sell signals for Bollinger Bands (top chart) as well as the Commodity Channel Index (bottom chart). (Raw information from the Stock Charts site). As a rule, nosotros run into the publish of purchase signals peak ahead of cost during a marketplace bike as well as the publish of sell signals anticipate a bike cost low. Sell signals for the electrical current bike peaked inward mid-January, amongst fewer sell signals posted at the slow January/early Feb lows. Buy signals for the electrical current bike peaked early on inward February.
One interesting facet of the Bollinger mensurate is that it is the absence of weakness–and non but the presence of strength–that alerts us to a potent stock market. When the marketplace is ready to plough over, at that spot are typically weak shares as well as sectors leading the agency as well as that shows upwardly every bit a relatively elevated publish of sell signals for the Bollinger Band measure, fifty-fifty every bit the index cost has been close highs. On the other hand, when really few stocks as well as sectors are weak, the marketplace oftentimes drifts higher, every bit selling pull per unit of measurement area is minimal.
For example, I looked at the flow from early on May, 2014 (when I starting fourth dimension began assembling these data) to the introduce as well as broke downward the publish of sell signals for the Bollinger Band mensurate inward a uncomplicated median split. When nosotros had few sell signals, the side past times side 5 days inward SPY rose past times an average of +.37%. When nosotros had to a greater extent than sell signals, the side past times side 5 days inward SPY rose past times an average of solely +.06%.
Interestingly, daily sell signals for the Bollinger Band mensurate correlate solely +.07 amongst the RSI mensurate as well as solely +.21 amongst the MACD measure. The absence of sell signals for those latter ii indicators has non led to superior returns going forward. Indeed, when we’ve had few MACD sell signals, the side past times side 5 days inward SPY convey averaged a range of solely +.09% vs. +.34% when we’ve had many sell signals.
It appears that separating the publish of purchase as well as sell signals as well as looking inside each indicator captures unlike fourth dimension frames as well as unlike patterns of momentum as well as reversal. This strikes me every bit a closed to promising expanse of research, peculiarly when nosotros focus on technical indicators that are non highly correlated.
Further Reading: Technical Indicators From the Bottom Up