Five Star Charts Attributes

Five Stars attributes

Five Star Charts did an extended research on the characters of all the outperforming stocks. We found that when a stock is in a strong uptrend, it has at least these five attributes to identify itself. (For example: If you a raging bull, you run like a bull, you breathe like a bull and you act like a bull.) We call them Five Stars attributes: 

  1. Well Defined Strong Uptrend
  2. Strong Direction Movement
  3. Strong Momentum
  4. Strong Technical Leadership
  5. Strong Volume

Our standard membership provides many listings of stocks that have or potentially have the Five Stars attributes Not all the stocks in our list will have the five stars attributes at the same time. The Watch-list page gives you the qualified stocks that potentially fulfill the five stars attributes. So the fastest and easy way to start using our system to see our Opened positions and our Watch-list for Standard Members and the Premium Portfolio for our Premium Members.

 Invest in the Same Direction the Market is Headed.

Trend trading is the most simple strategy to keep you on the right side of the stock market. The strategy attempts to capture gains through the analysis of the beginning of an uptrend or a downtrend.  Secular trend or the major trend is the dominated trend for investors to define his/her strategy. Never trade countertrend! 

How to define an uptrend?

Price has to trade above the 20 days, 50 days and 200 days moving average

20 days moving average above the 50 days moving average

50 days moving average above the 200 days moving average

Price needs to make higher high and higher low within an uptrend. 

Image result for trending stocks

Invest at the beginning of the strong uptrend.

Average Directional Index-ADX is an indicator used in technical analysis as an objective value for the strength of a trend. When ADX is above 25, it means a strong uptrend or downtrend is coming. When ADX falls below 20, it means no trend and useless/waste of time for investors to trade the stock. When ADX near 40 to 60, the trend is at the maximum level. It also means the short-term uptrend is ending. +DI and -DI alongside with the ADX are used to measure the strength or weakness of a trend. 

 

Image result for ADX indicator

Identify the Strengths of the Market

Elliott wave theory defines the strongest and the longest wave is the Third Wave move. For investors to capture the fastest move of the stock price is within the Third Wave. It usually marks the highest momentum and the strongest acceleration to the upside. The runaway gap is the signature of the Third Wave move. Five Star Charts provides many stocks with an opening gap up situations. However, trading the gap requires technical analysis skills on the precise entry or exit. It is not an easy task for retail investors to monitor gaps and define a trading strategy. Five Star Charts attempts to identify the best opportunity for gaps trading. 

                                                                                 Image result for the third wave of elliott wave

Strong Leadership 

When you invested in a stock, do you know the comparison of your stock and the other stocks in the same sector? 

When you invested in a sector, do you compare your sector and other sectors?

When you invested in any stock, do you compare your stock and the stock index?

Most investors don't spend enough time on his/her stocks, that's why their stocks are not performing well. 

Using relative strength comparison, we can compare :

stocks vs. stocks; stocks vs. sectors, stock vs index  

Asset class vs. Asset class; (for example Gold vs. Bond;  Stocks vs. Commodity; US index vs. Canada index. Emerging market vs. US market, Tech vs. Large Cap stock)

Finding the leaders among all the sectors, countries, assets, etc are the key to successful investing. Macro research is putting all these together to give investors a clear direction of the macro direction of investing. Our newsletter: North America Intermarket Technical Research is focusing on macro studies like interest rate, currency, commodity, indexes, one of the most valuable tools for investors to understand the big picture. Our newsletter always select the leading sectors, countries ETFs and leading stocks in the sector for investing opportunities.  This provides professional investors like portfolio managers to easily pick up the best stocks among the best sectors. 

Price Relative - Chart 1

Strong Volume

Volume is "the blood" of a stock, without volume, a stock never has enough strength to move. Strong volume means strong positive money flow into the stock with large net buying volume transaction. If a stock had an ONE-day strong volume transaction, after that day, the volume is no longer expanding. That is more likely price will come down soon within 10 days. Multiple days of high volume transactions are a very good sign of strong accumulation which indicates the strong move is on the way. It is better for investors to choose high volume stocks to trade due to liquidity issue. 

OBV rises when volume on up days outpaces volume on down days. OBV falls when volume on down days is stronger. A rising OBV reflects positive volume pressure that can lead to higher prices. 

 

Chart 4  -  On Balance Volume