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Here, you are going to learn how to set up:
Bollinger Bands, the 20 Day Moving Average, 50 Day Moving Average, and the Stochastic Momentum index
on the Yahoo Finance S&P500 chart. This is for a laptop or desktop computer. I haven’t figured out mobile setup yet.
Go to Yahoo Finance Charts S&P500. Here is a graphic of the chart setup. (You could use other chart sources, like Google Finance, Stockcharts.com or other free chart sites on the web..knock yourself out)
Along the top are the settings and indicators. You may just be seeing an up and down line.
At the top, Set the line to Candle, it gives you a better look at the daily up and down range of movement.
At the top, Set the Date range to 1 YR. You can look at longer date ranges for comparisons.
At the top, Set the interval for 1 day.
Under indicators choose Bollinger bands. This gives you a range of 95% of the movement activity. These are useful to give you a view of the playing field of movement. I set the line color to Blue. Not solid. By default this gives you a 20 Day moving Average line (very important) in the center of the Bollinger bands. I set the 20DMA to color red.
Under the indicators choose 50 Day Moving Average…I set that to color purple.
Under indicators, now set the Stochastic Momentum Index (SMI). This is the trickiest. Set these settings. 14, 5, 5 (%K periods=14, %K Smoothing periods=5, %K Double Smoothing periods=5, %D periods =10, % D Moving Average type=exponential) Colors %K=green, %D=yellow, Turn off show zones, Overbought=40, black, Oversold=-40, black. The Stochastic Momentum Index indicator appears under the stock chart. Notice that the SMI has a black midline. I only use the SMA after a downward period of volatility, to help identify a bottom, when it is below the midline. I do not use the SMI indicator when the market is rising and the SMI is above the midline on the SMI indicator chart.
Now bookmark the chart you have setup in your browser.
Now you are all set up! That is the hardest part. You might want to keep a window of the setup chart open to refer to as you learn about Pattern 1 and Pattern 2 and the BUY and SELL signals. You can go back in time and see when each has occurred.
Extra Credit Homework: Go back in time on the Chart by dragging it, and look for examples of Patterns 1 & 2 and of BUY and SELL signals. Notice that when the SMI bottoms out and turns up (below the black midline) (the SELL signal) it is often followed by a rise in the S&P500 index.
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There are many other indicators and comparisons you might want to play around with, knock yourself out. There are many sources of information on the web about the 20 Day Moving Average, 50 Day Moving Average, Bollinger Bands and the Stochastic Momentum index, they are commonly used indicators.
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