Fun with Worden Indicators (T2120)

I have seen TraderMike and the Kirk Report reference their use of the T2108 indicator available in Telecharts. They certainly have highlighted very effective uses of these tools to show oversold and overbought conditions. I call these groups of Telecharts indicators the T Indicators because they all start with T’s. One of my personal favorites is T2120 which is new highs for the last 26 weeks divided by new highs + new lows.

Pretty cool, but on their own they are really a bit to scattered and erratic. So I placed a very wide Bollinger band (10 bar, 5 Standard Deviations) around the indicator and from those Bollingers derived a Stochastic (70 period, 7 period %k, 12 period %d, D is plotted) that shows bottoms pretty well.

My initial reaction when looking at this is that the blue Bollinger lines need to drop into that 20 range. The red stochastic line in a perfect word penetrates oversold and price represented by the green line chart (Nasdaq) has a yucky, scare the pants off you day. But unfortunately markets are not that compliant in our lofty goals. So they do silly things like chop around for 6 months. Or go down for 6 months. Or turn on a dime and leave you in the dust. Either way have a system, or systems, in place to take advantage of whichever scenario plays out.

I also wanted to mention Gold as a possible play on market strength and weakening dollar. As you might remember our trend following system triggered second entry add-on buys in some of the commodities (oil, gold) and concurrently triggered a buy in the Euro currency. If this plays out I could see Gold being the big beneficiary as world markets strengthen (commodity demand increase) and the Euro continues it’s strength against the dollar. This would in my opinion could create a decent environment for some price appreciation in Gold. But this is really trying to fit the world to my buy signal. And if it rolls over and I get an exit signal then all this is just macro BS and will be nothing more than silly hyperbole.

Have a Great Night!

Dave Johnson