Donchian 5 20 System Applied To Stocks

Richard Donchian created a system he called the Donchian 5 20 system in 1961. The system involves the use of the 5 day moving average and the 20 day moving average. Donchian believed that the 5 and 20 day moving averages have a special relationship because there are about 4, 5 day periods in a month or about 20 trading days excluding weekends.
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Advanced Micro Devices Stock Rising After BNP Paribas Upgrade

Advanced Micro Devices stock is rising after it was upgraded by analysts at BNP Paribas from a Neutral rating to an Outperform rating on Thursday, October 12, 2017.

Memory prices have increased and most analysts expect memory prices to remain high well into 2018. Despite increased demand for memory, neither Micron nor its competitors have moved to increase capacity.

Costco Stock Price Ready To Move Higher on 200 Day MA Break

Costco stock price looks ready to move higher after a pocket pivot formed on today's chart.

For the year ending September 3, 2017, Costco reported EPS of $5.89 which beat analysts' estimates of $5.77 per share. Revenue also beat coming in at $129 billion, up almost 9% year over year, versus the estimated $128.5 billion.

Moving Averages and High Low Index Signals

Key moving averages and the high low index of the S&P 500 is signaling patience for those of us who are sitting back in cash.

The S&P 500 High Low Index is in a free fall which suggests that it’s too early to go long a stock for a V bottom bounce:

The NYSE percent of stocks above the 200 day moving average is also still in a free fall:

The NYSE percent of stocks above the 50 day moving average doesn’t look much better:

At least the NYSE percent of stock above the 50 day moving average is showing signs of consolidation rather than a free fall.

Ideally you should be in cash right now and looking for a swing long entry. Do not be quick with the buy button. You want further evidence of consolidation or a basing pattern before taking that swing long entry.

Sofi AI Market Sentiment Gauge

Sofi AI Market Sentiment Gauge

Market is neither overbought or oversold.