Consolidation

[cmlee]

hi,
is there any metastock formula to detect if a stock is in consolidation phase?
thanks

 

[karthikmarar]

Lee

You can use the following formula which is known as Congestion index for screening (in the Metastock Exporer) for stocks which are in consolidation

((HHV(C,80)-LLV(C,80))/LLV(C,80))*100 < 15

Lee, you can adjust the number 80 and 15 to get optimum results for the market you are trading in. Since you are trading in singapore markets i cannot help much. For indian markets I am comfortable with 40 instead of 80.

karthik

 

[cmlee]

whats 80 and 15 stands for?

 

[karthikmarar]

whats 80 and 15 stands for?

Lee

80 is the number of trading sessions. 15 is the ercentage. The formula is quite simple. It is nothing but therading range (highest minus the lowest) in the last 80 trading sesions expressed as a percentage of the lowest value in the last 80 sessions. The lowest value would be normally the base line (or the support level in that period. 80 sessions would mean almost 3 months. If the stock is trend upwards or downwards the Congestion Index would have a high value since the difference betwen the highest and lowest value would be large. When the stock is moving in a narrow range the difference will be small. what we are checking with this formula is for stocks which are moving in a narrow range... less than 15%. It will quite intersting if you look at the immediate CI, CI 10 days before, CI 20 days before and CI 30 days before..(This can be easily done using Metastock explorer)...throws up some interesting figures on stocks slowly going into a trading range..
Hope I was able to throw more light on the formula..

karthik

 

[cmlee]

karthik,
can you upload to me a picture of how your Congestion index looks like?
mine only fluctuate between 0 and 1

 

[karthikmarar]

karthik,
can you upload to me a picture of how your Congestion index looks like?
mine only fluctuate between 0 and 1

First congrats....for becoming a senior member..
I am uploading a chart with the congestion index plot. Note this indicator uses 40 trading sessions.

Lee, First create a new Indicator called Congestion Index with the following formula.

((HHV(C,80)-LLV(C,80))/LLV(C,80))*100.

Then you can plot the same with your stock. Use this indicator to screen for consolidating stocks with the Explorer with the condition <15

Create an Explorer. as follows

Col A: Fml("Congestion Index") < 15
Filter :colA

You can screen the stocks without creating an indicator by directly entering the formula in the Explorer as follows

Col A: ((HHV(C,80)-LLV(C,80))/LLV(C,80))*100 < 15
Filter colA


karthik

 

[kmathur]

hi
I am a new joinee,great to find your consolidation formula, can you help me out with free chart software available on the net!!!!

Regards
K****ij