HASI: How To Chart Using MEST = Momentum, Energy, Space, Time
Two days ago I published a chart for-HASI. In my opinion, the market is moving this stock higher.
Here are several reasons why I think this is true.
The Alligator: How it works. The Alligator is a collection of three moving averages, which are called the Lips, the Teeth and the Jaw and colored blue, golden, and black.
The idea of the trading strategy is to catch those big trending movements that occur for less than 40% of all time. Such moments can be identified by looking at the Alligator Lines. Usually, before a big move happens, the price moves in a tight range and intertwines with the Alligator Lines. This is called a "sleeping alligator" because it is so quiet. Then it explodes into a big move. The price starts moving away from the Alligator, and the Alligator Lines are opening. This phase is dubbed the "hungry alligator" because it looks like an alligator wakes up from sleep and opens its mouth (distance between the lines) to chase the little fish (price bar) for breakfast.
The Three Wise Men Now onto the entry rules, i.e. the Three Wise Men. In order to understand them, you must have the following indicators on your charts: 1. Alligator (as described above). This is wise man number one. 2. Awesome Oscillator (phase energy, lower indicator above the chart). This is wise man number two. 3. Fractals (up and down arrows). This is the third wise man.
Awesome Oscillator Definition and Facts:
1. The difference between a 5-period and 34-period median price moving average, which is actually the 5-34 MACD histogram.(Simple moving average better than EMA)
2. Bars that are higher than the previous one are painted green, otherwise painted red.
Entry and Exit (long):
1. Ideally it is preceded by a bullish divergence bar, or a-morningstar candlestick or else must be preceded by a down fractal.
2. Buy when the AO (phase energy bars) shows three consecutive green bars.
3. Stop begins at the bottom the bullish divergence bar or down fractal, then gradually trail up to the latest 3-5 bars low, or when a bearish divergence bar appears.
4. Opposite for short entry.
Comments: The AO is more than just a provider of entry signals. The best use of it is to point out divergence in a trend. The divergence is the difference between price and momentum direction. For example, when a trend is showing higher highs, but the bars in the AO have lower highs, this is a case of divergence, and usually an end of trend will follow soon.
The Third Wise Man: The Fractal. 1. An up fractal is a high of a bar preceded by 2 lower highs and followed by 2 lower highs. 2. Signal of an up fractal is only valid if it is above the Alligator lines. 3. Vice versa for a down fractal.
Entry and Exit (long): 1. Buy on breakout of a valid up fractal (above Alligator).
2. Stop begins at the bottom of the bullish divergence bar or down fractal, then gradually trail up to the latest 3-5 bars low, or when a bearish divergence bar appears. 3. Opposite for short entry.
Comments: The fractal is actually a breakout strategy on previous high or low. According to Bill Williams, each fractal is an end of an Elliot Wave, and a breakthrough of each fractal marks a new impulsive wave, so that we are able to trade that wave even without knowing what wave we are in.
Unfortunately - I am running out of room for this entry. On the chart above for-HASI, the MEST-positives are an up Fractal, three green up bars for phase energy (AO), and the alligator is feeding in the uptrend. Other trading positives, the Ichimoku Cloud is rising, the 89 day moving average is rising, and the Ichimoku Cloud has a green border. My advice, pay attention to-MEST (momentum, energy, time, space). Your wins will be big, your losses small.
Good luck to you in all your trades. Don.
Here are several reasons why I think this is true.
The Alligator: How it works. The Alligator is a collection of three moving averages, which are called the Lips, the Teeth and the Jaw and colored blue, golden, and black.
The idea of the trading strategy is to catch those big trending movements that occur for less than 40% of all time. Such moments can be identified by looking at the Alligator Lines. Usually, before a big move happens, the price moves in a tight range and intertwines with the Alligator Lines. This is called a "sleeping alligator" because it is so quiet. Then it explodes into a big move. The price starts moving away from the Alligator, and the Alligator Lines are opening. This phase is dubbed the "hungry alligator" because it looks like an alligator wakes up from sleep and opens its mouth (distance between the lines) to chase the little fish (price bar) for breakfast.
The Three Wise Men Now onto the entry rules, i.e. the Three Wise Men. In order to understand them, you must have the following indicators on your charts: 1. Alligator (as described above). This is wise man number one. 2. Awesome Oscillator (phase energy, lower indicator above the chart). This is wise man number two. 3. Fractals (up and down arrows). This is the third wise man.
Awesome Oscillator Definition and Facts:
1. The difference between a 5-period and 34-period median price moving average, which is actually the 5-34 MACD histogram.(Simple moving average better than EMA)
2. Bars that are higher than the previous one are painted green, otherwise painted red.
Entry and Exit (long):
1. Ideally it is preceded by a bullish divergence bar, or a-morningstar candlestick or else must be preceded by a down fractal.
2. Buy when the AO (phase energy bars) shows three consecutive green bars.
3. Stop begins at the bottom the bullish divergence bar or down fractal, then gradually trail up to the latest 3-5 bars low, or when a bearish divergence bar appears.
4. Opposite for short entry.
Comments: The AO is more than just a provider of entry signals. The best use of it is to point out divergence in a trend. The divergence is the difference between price and momentum direction. For example, when a trend is showing higher highs, but the bars in the AO have lower highs, this is a case of divergence, and usually an end of trend will follow soon.
The Third Wise Man: The Fractal. 1. An up fractal is a high of a bar preceded by 2 lower highs and followed by 2 lower highs. 2. Signal of an up fractal is only valid if it is above the Alligator lines. 3. Vice versa for a down fractal.
Entry and Exit (long): 1. Buy on breakout of a valid up fractal (above Alligator).
2. Stop begins at the bottom of the bullish divergence bar or down fractal, then gradually trail up to the latest 3-5 bars low, or when a bearish divergence bar appears. 3. Opposite for short entry.
Comments: The fractal is actually a breakout strategy on previous high or low. According to Bill Williams, each fractal is an end of an Elliot Wave, and a breakthrough of each fractal marks a new impulsive wave, so that we are able to trade that wave even without knowing what wave we are in.
Unfortunately - I am running out of room for this entry. On the chart above for-HASI, the MEST-positives are an up Fractal, three green up bars for phase energy (AO), and the alligator is feeding in the uptrend. Other trading positives, the Ichimoku Cloud is rising, the 89 day moving average is rising, and the Ichimoku Cloud has a green border. My advice, pay attention to-MEST (momentum, energy, time, space). Your wins will be big, your losses small.
Good luck to you in all your trades. Don.