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Cập nhật The Homma Overextended Indicator
How do you define over-extendedness?
To define over-extendedness, you must first quantify extension.
The most common way is to measure the stock price (usually closing but one can also use the high/low) distance away from its moving average.
The common moving averages that are used are the usual suspects as below:
9ema/10sma
20sma/21ema
50sma
200 ema/sma
let’s measure how extended is LICI from these MAs right now.
It is ~13, 15, 30, and, 64% extended from its key MAs.
Here comes the trick question.
How do you know if this is under-extended and could get extended further, or if it is extended significantly more than what LICI does on average?
The answer is not a constant.
It varies from stock to stock.
For example, a high Beta stock (generally the small and midcaps) can be extended 10% from 50sma and that would be normal, whereas a low Beta stock (generally most large caps) extended by the same degree might be a sign that it will retrace back to its mean.
Over-extendedness for the same stock can be different in different market conditions.
But how?
Because, in trending (bullish or bearish) conditions, the swings are higher compared to in a sideways market.
Also, since “distance away from its moving average (in %)” can have a huge spread and is an arbitrary number. A better way is to express this “distance away from its moving average (in %)” as a multiple of its ATR.
Example:
Stock A: ATR = 2%
Extension = 20% from 20sma
Better way = 20/2 = 10X-ATR extended.
Low Beta stocks (low volatility stocks) will mean revert from a low multiple extension, while, high Beta stocks do so after a higher multiple extension.
“BUT BRO,
You still haven’t told me, how much is high and how much is low.”
I haven’t.
But read on.
whats overextended for Homa
For the kind of stocks I trade,
Microcaps and smallcaps (high Beta stocks, high ATR), this is what I consider over-extended (from observation and my experiential learning only):
close price extended more than 6X ATR(14) from 20sma.
What’s over-extended for these super traders?
Dan Zanger: 20% from 200sma (daily).
Rai from Traderlion: 10% from 8ema (daily).
Suresh Garu (Twitter): 100% from 40ema (weekly).
Jeff Sun (twitter): 6X ATR(14) from the 50ema (daily).
Oliver Kell: 140% above 200 sma (daily).
To define over-extendedness, you must first quantify extension.
The most common way is to measure the stock price (usually closing but one can also use the high/low) distance away from its moving average.
The common moving averages that are used are the usual suspects as below:
9ema/10sma
20sma/21ema
50sma
200 ema/sma
let’s measure how extended is LICI from these MAs right now.
It is ~13, 15, 30, and, 64% extended from its key MAs.
Here comes the trick question.
How do you know if this is under-extended and could get extended further, or if it is extended significantly more than what LICI does on average?
The answer is not a constant.
It varies from stock to stock.
For example, a high Beta stock (generally the small and midcaps) can be extended 10% from 50sma and that would be normal, whereas a low Beta stock (generally most large caps) extended by the same degree might be a sign that it will retrace back to its mean.
Over-extendedness for the same stock can be different in different market conditions.
But how?
Because, in trending (bullish or bearish) conditions, the swings are higher compared to in a sideways market.
Also, since “distance away from its moving average (in %)” can have a huge spread and is an arbitrary number. A better way is to express this “distance away from its moving average (in %)” as a multiple of its ATR.
Example:
Stock A: ATR = 2%
Extension = 20% from 20sma
Better way = 20/2 = 10X-ATR extended.
Low Beta stocks (low volatility stocks) will mean revert from a low multiple extension, while, high Beta stocks do so after a higher multiple extension.
“BUT BRO,
You still haven’t told me, how much is high and how much is low.”
I haven’t.
But read on.
whats overextended for Homa
For the kind of stocks I trade,
Microcaps and smallcaps (high Beta stocks, high ATR), this is what I consider over-extended (from observation and my experiential learning only):
close price extended more than 6X ATR(14) from 20sma.
What’s over-extended for these super traders?
Dan Zanger: 20% from 200sma (daily).
Rai from Traderlion: 10% from 8ema (daily).
Suresh Garu (Twitter): 100% from 40ema (weekly).
Jeff Sun (twitter): 6X ATR(14) from the 50ema (daily).
Oliver Kell: 140% above 200 sma (daily).
Phát hành các Ghi chú
change SKBN to 200emaPhát hành các Ghi chú
added table position change optionPhát hành các Ghi chú
added option to change the ATR multiplierPhát hành các Ghi chú
can change ema/sma valuePhát hành các Ghi chú
Fixed the over extended calculationMã được bảo vệ
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Thông báo miễn trừ trách nhiệm
Thông tin và ấn phẩm không có nghĩa là và không cấu thành, tài chính, đầu tư, kinh doanh, hoặc các loại lời khuyên hoặc khuyến nghị khác được cung cấp hoặc xác nhận bởi TradingView. Đọc thêm trong Điều khoản sử dụng.
Mã được bảo vệ
Tập lệnh này được đăng dưới dạng mã nguồn đóng. Tuy nhiên, bạn có thể tự do sử dụng tập lệnh mà không có bất kỳ hạn chế nào – tìm hiểu thêm tại đây.
Thông báo miễn trừ trách nhiệm
Thông tin và ấn phẩm không có nghĩa là và không cấu thành, tài chính, đầu tư, kinh doanh, hoặc các loại lời khuyên hoặc khuyến nghị khác được cung cấp hoặc xác nhận bởi TradingView. Đọc thêm trong Điều khoản sử dụng.