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Joined: 6/6/2005
Posts: 1,157
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Hi everyone,
A while back Diceman presented a method to draw automatic trendlines on charts. At the time I meant to post my method for finding triangles and wedges that has worked very well and is based on the same principles. But before i do, I must admit that the idea was not completely my own. It was inspired by TC Companion's built in triangle finder.
Here is what the chart looks like. I call the pattern Dragon Candlestick because that's what it resembles to me when I see it. A Lockness monster/dragon about to pounce on profits.
The chart is created by 4 things...
1) The custom indicator (h*1.01) - this represents a point 1% higher than today's high
2) The custom indicator (l*.99) - this represents a point 1% lower than today's low
3) A 10 day linear regression line of #2
4) A 10 day linear regression line of #3
Now you can sort for the dragon which is a very easy process. First, I sort my watchlist by the 10 day linear regression of the high blue line looking for stocks that have a sort value of 0.10 or less. Then I space bar down the list looking for candidates which are very easy to spot.
Here are some I found today:
As you can see, the patterns don't always look perfect, but what I'm generally looking for is that wedge/triangle continuation feeling.
Once I find one like this I wait for confirmation in the shape of a breakout, then place my stop below the last swing low.
Generally, these moves are somewhere in the range of 5-10%. As you can see from the chart below, QD did okay. For a sell trigger, once the initial profit of 5% has been reached, you can move your stop loss to the prior day's low, and let your profits run.
Thanks for listening.
David John Hall
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Registered User
Joined: 9/25/2007
Posts: 1,506
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Very interesting DJH ... and thanks for sharing ...
NTES and AUY both look, to me, very well positioned for continuations ...
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Registered User
Joined: 7/28/2007
Posts: 118
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Thanks DJH, I now have a chart Template named The Dragon.....EMKR looks lik a possibilty....
Griz
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Registered User
Joined: 6/6/2005
Posts: 1,157
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Hey Griz, you're welcome. Yes, EMKR does look nice. I like to draw my patterns from closing prices and when i do that EMKR has even bigger triangle than the 10 day. A strong volume breakout should push it higher. I like the green volume bars during the consolidation phase.
Incidentally, I took the AUY trade and the NTES trade above. Both started to break out but have pulled back. My stop is just below the last swing and my trade size was adjusted accordingly. The HLS trade seems to have broken out as well.
Good luck!
David John Hall
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Registered User
Joined: 7/28/2007
Posts: 118
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EMKR is breaking out of its' consolidation pattern on strong volume....
Griz
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Registered User
Joined: 6/6/2005
Posts: 1,157
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Nice call Griz! On excellent volume. Short period RSI with room to grow as well.
Looks like it also breached the 20 day high close channel.
HLS is also perforrming well.
Here's to finding more.
David John Hall
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Registered User
Joined: 3/21/2006
Posts: 4,308
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David, I like your idea to sort for this type of pattern. I too have set up a Template built around your design. I first sort for a positive slope on the lower indicator and then discard all stocks with a negative slope. I then sort the remaining stocks for a negative slop on the higher indicator, discarding all stocks with a poitive slope. I am now left wth a host of triangles to view at my leisure.
What do you think of -
GFI
ASTI
TMRK
PETS
RUSHA
AVD
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Registered User
Joined: 6/6/2005
Posts: 1,157
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Hey ApsII,
I've had ASTI on my list from yesterday. I'm a little concerned about the divergence between price and the longer term RSI, but a good breakout could change that.
Regarding the others I like TMRK, expecially the outside day large volume up day we just saw.
The others I am not sure about. I need a little more time to fully understand this chart and the patterns I like, but the other picks seemed to have a "Beaten Dragon" feeling to them. Their backs seem hunched over, tired, not strong. I know I'm speaking in metaphors, but do you agree?
Take a look at RUSHA:
This pattern does not look ferocious enough. Or I could just be losing my marbles after staring at charts for so long.
Let me know what you think!
David John Hall
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Registered User
Joined: 7/28/2007
Posts: 118
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In addition to ASTI and TMRK I liked the following;
SVA
IVN
COGO
ISIS
There are a couple of others that look promising as well.
APSLL, great idea with the sort , I really liked that. It lead me to do an initial sort on a Linear Regression Line of 42 on Price to ensure at least a short term uptrend before sorting on the 10 LR's.
Thanks again guys!
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Registered User
Joined: 6/6/2005
Posts: 1,157
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Nice. I like COGO and SVA. I like the idea of the longer linear regression sort as well!
David John Hall
:)
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Registered User
Joined: 7/28/2007
Posts: 118
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Very cool! Now all we need are some T-shirts with the logo.
Griz
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Joined: 10/18/2006
Posts: 8
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Hi:
Can you share your pcf/search criterias for drawing trendlines, traingles wedges, as in the examples above (dragon) While browsing some charts- accidentally found NDAQ and MRK just before the breakout- both very profitable.
Thanks
Pawan
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Joined: 6/6/2005
Posts: 1,157
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Hi psaxena,
The process is described above. If you set up a chart exactly as described then you will be able to sort your watchlists accordingly. There are no pcfs that I use thought I am working on them and have gotten close. I will post them when I have them. Very nice trades on NDAQ and MRK.
David John Hall
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Joined: 1/28/2005
Posts: 6,049
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davidjohnhall
I'm glad you brought up the concept of sorting by
the regression line.
I knew of this concept when I put my first post
and just forgot to bring it up.
Thanks
diceman
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Joined: 3/21/2006
Posts: 4,308
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David, I think that the long term RSI (Widers) is still recovering from the negative action from late September to mid October. If you shorten the time frame to the last 5 days you will see a different picture. Also if you extend the time frame to 150 days then we still have a good read on ASTI.
With RUSHA I agree the pattern is ambiguous. I liked it because TSV, Money Stream and BOP looked positive, however there is no clear sign of an uptrend at this point..
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Joined: 7/28/2007
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The Dragon has given me CBZ tonight....It has held up fairly well through this recent distribution and is staying above the 21 day sma on the daily. It would have to move over 9.10 or 9.20 though before I would trade it on very good volume.
Looks like it is finishing the right side of a year and a half base on the weekly chart.......
Griz
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Joined: 11/7/2007
Posts: 49
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Hi David, did you make that Dragon Logo, or did you take from somewhere. Let me know where.
Thanks
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Registered User
Joined: 6/23/2007
Posts: 31
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Hi Davidjohnall,
When you say :
"Now you can sort for the dragon which is a very easy process. First, I sort my watchlist by the 10 day linear regression of the high blue line looking for stocks that have a sort value of 0.10 or less."
Do you sort by visual value ?
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Registered User
Joined: 7/24/2006
Posts: 2
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davidjohnhall ~ love the post about the dragon candlesticks. I can see them very well when looking at charts but this scan would save tons of time.... BUT, I am having much trouble creating the scan. I have very little experience in them. Can you be more detailed in the creation of the scan? I printed out your directions but just can't seem to create it.
Thx,
Patti
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Joined: 7/28/2007
Posts: 118
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Registered User
Joined: 7/28/2007
Posts: 118
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I had to smile when I saw this thread resurface :]
I haven't logged in for quite some time and when I do what do I see? The Dragon!
This ranks in my top 5 scans...Simple really, but it works. Do not over complicate this. It is a breakout following consolidation. Keep stops at the swing low and add to winners......Trade only in a trending market up or down, makes no difference.
To the noobs out there...pay very careful attention to what David John Hall posts....
Keep the sunny side up!
Griz
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Joined: 6/6/2005
Posts: 1,157
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Hey grizzled1, thanks for the kind words! I'm glad the dragon works for you and that you found the post useful. Here's to many more dragons showing up soon!
pd, I'm not really sure how to go further into detail. I think I might put together a video soon that shows exactly how to create the indicators and scan for the dragon. As grizzled says it is a very simple scan, but it's a great way to isolate the different criteria that make up the consolidation pattern. From there you can space bar through the results to find the ones that speak to you.
I'll see what I can do about getting that video made as it will show exactly how this scan is created and just how easy it is to use.
David John Hall
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Joined: 2/28/2005
Posts: 825
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Any way to set up the dragon for an easyscan? Could you describe the process if so?
TIA
Art
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Hey alindsley,
I've tried doing that but I never quite get the results I'm looking for. i prefer to do the linear regression scans because it puts me more in touch with the market. But nonethless, here's what I have worked on...
Set up 4 pcfs:
1. C>c44
2. h<h10
3. L>l10
4. V<v10
Then start a new easy scan. Select russell1000 as your watchlist. Then add each pcf in the order shown and keyboard through.
And let me know if it works. LOL As I said, I have never quite gotten the results I wanted doing it that way.
David John Hall
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Joined: 2/28/2005
Posts: 825
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Thanks David. I have a list of past IBD200_all which I ran your scan on, which present 25 candidates. of which were quite iff'y.
Although FORR just broke out, the results showed
CELG and WHG present a tiny triangle and FMC grants insight on what 'may' happen to these two.
GSIT was interesting
Pretty cool scan.
Thank You for sharing
art
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Joined: 6/6/2005
Posts: 1,157
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You're welcome. On the russell 1000 I will typically find 8-10 candidates on a good day during an uptrend and considerably less in the current climate so that sounds about right for what you would find on a list of 200.
David John Hall
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Joined: 9/22/2005
Posts: 849
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With David’s familiarity with dragons, is it possible that in a prior existence his name may have been Merlin?
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Joined: 6/6/2005
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Hi bcraig,
Not only to I think it's possible, it might be highly probable! Here's me approaching one of the airline or financial sector dragons:
That was a rough day!
:)
David John Hall
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Joined: 2/28/2005
Posts: 825
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David I made up a template just for your setup and included the TRIN (9d) below in the middle pane along with the MACD 14,3,3. Ready to boogie with IPHS.
Now if only I could find my Elvis collection........
Nice dragon pic. Looks like you got him well under control
thanks again
art
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Joined: 6/6/2005
Posts: 1,157
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Nice! Let me know how that works for you. We can reveiw trades that work as well as those that don't and see if we can isolate strengths and remove weaknesses from the plan.
David John Hall
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Joined: 6/6/2005
Posts: 1,157
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Hey everyone,
I'm not sure if posting video content is allowed here on the Worden message board but I have created 2 videos detailing the process of creating the indicators and scanning for the dragons. As this is demo screencapture software, I had to create two videos. The first shows how to set up the screen, and the second shows how to do the actual scanning.
And the second video on scanning: David John Hall
To view this video you must have Macromedia Flash Player and Microsoft Internet Explorer 5+
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Registered User
Joined: 12/31/2005
Posts: 2,499
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Nice job. Very instructive.
Thanks for sharing.
Have you done any studies with regard to the slope of the volume as it relates to the dragon?
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Registered User
Joined: 6/6/2005
Posts: 1,157
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Hey jas,
Actually, yes I have. I don't have the exact numbers off the top of my head but decreasing volume on the pullback/consolidation did help results. I tested cumulative volume over the last 10 days and looked for lower volume than the preceding 10 days which would have been the runup.
I will look for the test for the exact numbers.
David John Hall
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Joined: 2/28/2005
Posts: 825
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Those were great tutorials David. Now I can see why your desire is to manually sort your stocks.
Thanks for taking your time to do this, and will look forward to more videos in the future now that we know you are allowed and very able <g>.
thanks again
art
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Registered User
Joined: 6/6/2005
Posts: 1,157
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You're welcome art,
Once I got over hearing my own voice, and talking to a computer, all was good. Even better that I can provide value to your trade routine. Thanks again,
David John Hall
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Joined: 10/7/2004
Posts: 816
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David John Hall
Very cool and clever! It looks like it's been working for you for at least a year. Good presentation too!
Many thanks
Hi jas0501 - are you thinking of doing something similar in blocks? If so, I'd be interested in knowing the process, if you'd be so kind.
Regards
Bob Mc
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Joined: 12/31/2005
Posts: 2,499
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QUOTE (BobMc)
...
...
...
Hi jas0501 - are you thinking of doing something similar in blocks? If so, I'd be interested in knowing the process, if you'd be so kind.
Regards
Bob Mc
As a matter of fact I did play around with the settings from the video. I then started messing with the chart to get the MA periods as fillins and the LRSs plotted based on a date pointer and then tuneable slope settings for the conditions and the chart got too tricky for a straight foward reverse enginneered dragon. I'll doit it again and share the simple implementation.
Just some Linear Regression Trendlines for the plots and some Linear Regression Slopes for the conditions. I added a weekly view for perspective. The red date pointers mark the same date. I'll share the Layout as David John Hall's Dragon shortly.
I may need to add a moving average to the daily price chart.
David do my 10 potential dragons match your result today?
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Joined: 12/31/2005
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Here is today's eod list and the chart modified to include RSI
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Joined: 6/6/2005
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Nice looking charts jas!
I will have to run the scan when I get home to see if the picks match up. But from what you have on the screen those clearly look like the type of dragons I find.
David John Hall
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Joined: 12/31/2005
Posts: 2,499
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Uploaded Layout "Dragon of David John Hall Vers. 1.0" to the Blocks share area.
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