To use, let the dotted lines below the price establish the trailing stop for a long position and the lines above establish the trailing stop for a short position. At the beginning of a move, the Parabolic SAR will provide a greater cushion between the price and the trailing stop. As the move gets underway, the distance between the price and the indicator will shrink, making a tighter stop-loss as the price moves in a favorable direction.

Information provided by Charles LeBeau's Technical Traders Guide to Computer Analysis of the Futures Market.

Use the PFE indicator to measure how trendy or congested the price action is. PFE readings above zero indicate that the trend is up and the higher the reading the "trendier" and more efficient the upward movement. PFE readings below zero mean that the trend is down. The lower the reading the "trendier" and more efficient the downward movement. Readings near zero indicate choppy, less efficient movement and a balance between supply and demand.

Following the curve of Polychromatic Momentum, go long when the curve moves above the green Polychomatic Momentum buy (bxo) level and go short when the curve moves below the red Polychromatic Momentum sell (sxo) level.

Positive Volume Index makes the assumption that the uninformed crowd dominates trading on active days. On days when volume increases, the crowd-following "uninformed" investors are in the market.

The PVI displays what the not-so-smart-money is doing just as the Negative Volume Index displays what the smart money is doing. However the PVI is not a contrarian indicator. While Fosback says the PVI shows what the uninformed may be doing, it still trends in the same direction as price.

(C-O) defines Intra-Day Momentum,
(C-L) defines Late Selling Pressure (LSP) and
(C-H) defines Late Buying Pressure (LBP).

This yields a single value that has proven itself by constructing ideal limit-up and limit-down scenarios in bond futures. The output has also shown to be consistent with the interpretation of Japanese candlestick patterns.

When the Close is near the Low, the stock's price is under selling pressure. If the Close is near the High, the stocks price is under buying pressure, the "Bulls are driving up the price." If the overall market conditions remain favorable, a high PAIN value with the Close near the High will be an excellent potential long.

As the amount of volume added to the PVT is determined by the amount that prices rose or fell relative to the previous day's close, many claim it can more accurately illustrate the flow of money into and out of a security than can the OBV. Recall that the OBV is designed so that it adds the same amount of volume to the indicator if the security closes up a fraction or doubles in price. The PVT on the other had, adds a small portion of volume to the indicator when the price changes by a small percentage and a large portion of volume to the indicator with tlarge changes in the price.

The Price and Volume Trend is calculated:

Once an uptrend has been established, an initial trend channel is constructed by drawing a basic up trendline along the bottoms of waves 1 and 2. A parallel channel line is then drawn over the top of wave. The entire uptrend will often stay within those two boundaries.

If wave 3 begins to accelerate to the point that it exceeds the upper channel line, the lines are redrawn along the top of wave 1 and the bottom of wave 2.

The final channel is drawn under the two corrective waves (2 and 4) and usually above the top. If wave 3 is either unusually strong or an extended wave, the upper line may have to be drawn over the top of wave 1.

The fifth wave should come close to the upper channel line before terminating. For the drawing of channel lines on long term trends, it's recommended that semilog charts be employed along with arithmetic charts.

The upper trendline will mark resistance and the lower trendline marks support. Price channels with downward slopes are considered bearish and those with upward slopes are bullish.

Look to buy when prices reach main trendline support in a bullish price channel. Sell (or short) when prices reach main trendline resistance in a bearish price channel.

Information provided by John Murphy, author of Technical Analysis of the Financial Markets and The Visual Investor.

Moving average analysis typically generates buy signals when a short-term moving average or price rises above a longer-term moving average. Sell signals are generated when a shorter-term moving average or price falls below a longer-term moving average. The Price Oscillator's single line illustrates the cyclical and often profitable signals generated by a two moving average system. Buy when the Price Oscillator rises above zero and sell when the indicator falls below zero.

Macek describes the indicator as, "for those with neither the time nor the inclination to master the techniques necessary to monitor every blip and sputter that the market produces...."

In short:

Use a 1 if price and volume are up
Use a 2 if price is up and volume is down
Use a 3 if price and volume are down
Use a 4 if price is down and volume is up

Buy when below 2.5 and sell when above 2.5.

For more detailed interpretation refer to the June 19994 issue of Technical Analysis of Stocks & Commodities.

They're drawn by finding the minimum and maximum prices over a specified number of days and projecting these forward, parallel to a linear regression line. The resulting plot consists of two bands representing the minimum and maximum price boundaries. Unlike Bollinger Bands, prices will always be contained by the two bands. The upper band represents a bullish view on the issue and the lower band a bearish one. When the price of an issue nears the upper limit, expect a price correction. If the price is nearing the lower limit, expect prices to move upwards.

Perhaps the best way to understand the relationship between the Projection Oscillator and Projection Bands is the knowledge that the Oscillator shows where the current price rests between the current location of the bands. A value of 0 indicates that prices are touching the bottom band, a value of 50 indicates that the current price is exactly in the middle of the two bands while a value of 100 indicates that prices are touching the top band.

Three common ways to interpret the Projection Oscillator:

• Overbought/oversold: Buy when the oscillator falls below a specific level (e.g., 20) and then rises above that level. Sell when the Oscillator rises above a specific level (e.g., 80) and then falls below that level.
• Crossovers: Buy when the oscillator crosses above a trigger and sell when the oscillator crosses below it. You may want to qualify your trades by requiring that the crossovers occur above the 70 level or below the 30 level.
• Divergences: Consider selling if prices are making a series of new highs yet the oscillator fails to surpass its previous highs. Consider buying if prices are making a series of new lows and the oscillator fails to surpass its previous low. Again, you may want to qualify your trades by requiring that the divergence occur above the 70 level or below the 30 level.