Deep Application Of Stock Technical Indicators

This column discussed the use of the technical index of momentum index (MTM) in order to determine the trend of the index in the next few trading days.

The reason why we use the MTM index is based on this.

Since EMTM (MTM average line) is smoother than MTM, we use EMTM instead of MTM. There are still some points to be grasped in the specific application.

Main points: the number of points is too high or too low.

This is a frequent phenomenon. If we do not pay attention, it will reduce the accuracy of our research.

For example, an index closed at 3000 on Monday, and Tuesday's judgment point was at 2920. Now it is an upward trend. According to our research method, we can maintain an upward trend as long as Tuesday's index closes above 2920.

Therefore, we concluded that the index will still rise on Tuesday, if the index's upward trend is reversed, the closing point will fall below 2920 points, which is equivalent to the decline of Tuesday's index at least more than 2.74%, which is a small probability event for a normally fluctuating market.

In fact, this conclusion is usually wrong. The index generally falls on Tuesday, but not below 2920 points. Where is the truth?

When we return to the formula of index, we can find that the low point in the upward trend indicates that the index has increased considerably in the short term, and the pressure on Tuesday's index to continue to rise will be relatively large because of "rising too much, falling or falling too much".

Of course, because the index is far away from 2920 points, it will not fall below 2920 on Tuesday.

Too low a judgment point is often a key time point, because the index's short-term rise is relatively large, and whether it can keep rising trend over time is the key two days.

Our final result is that the index may fall on Tuesday, and the upward trend will be tested.

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Main points: the absolute position of the index.

We usually use technical indicators to determine the position and trend of the technical indicators, but now we do not seem to need the EMTM trend, because we only need to calculate the future position of the EMTM, but this is not considered. The trend of the index still has the value of the study.

When the index closing is higher than the judgment point, it indicates that the trend is going up, otherwise it is going down. This is our basic research method.

However, in the actual process of judgement, we will find that the signals of rise and fall will often alternatively occur. If the contrary signals appear frequently, then our judgment method will lose meaning, because this is meaningless for operation, so we also need index charts to assist.

From the EMTM chart, we can see that because of the smoothness of MTM, the graph of EMTM is smoother. In most cases, it fluctuates with the axis of 0. The higher the absolute position is, the more likely it is to fall.

The specific method is to combine the absolute position of EMTM to judge.

If the absolute position of the EMTM position is high and starts to fall back, then even if the upward trend occurs, we should be cautious about it, and vice versa.

Key points: combined with other indicators to comprehensively judge the trend of the next trading day.

In this column, there are many indicators that can provide a turning point for the next trading day.

For example, Tuesday's EMTM judgment point is 2920 points, EBIAS's judgment point is 2960 points, if Tuesday's index closes 2950 points, between EMTM and EBIAS's judgment points, this time we can call this trend unknown trend or trend encounter resistance.

Based on the market rule of "more ups and down and more ups and down", the market rule is similar.