Stocks in a New Uptrend – Performance of the ADX Scan One Week Later
We ran an ADX “Stocks in a New Uptrend” scan on Thursday 09/06/18. Results have been exceptional. We talked about several of these during the daily LIVESTREAM broadcast over the past few days.
Note AMD was on the ADX scan 3 weeks ago. Look how that worked out, (+62.72%) in less than 3 weeks!
Treehouse Foods (THS) broke out on Friday. That was our first opportunity using the scan results Thursday night.
Money flow (CMF/OBV) and MACD are bullish. Look for a followthrough (F/T) if day trading this candidate.
CLDR – ADX
Cloudera, Inc. is a US-based software company that provides a platform for data engineering, data warehousing, machine learning and analytics that runs in the cloud or on premises.
ADX Line Crosses 20
We took a trade on CLDR as ADX line was climbing fast. The stock received two upgrades this week, with targets of 22 and 24. This is a swing for now.
Note the last time ADX ramped upward the stock ran for 8 weeks. We anticipate similar results if the indices remain strong and technology stocks hold their recent breakouts.
ADX Interpretation
The Average Directional Index (ADX) is used to measure the strength or weakness of a trend, not the actual direction. Directional movement is defined by +DI and -DI. In general, the bulls have the edge when +DI is greater than -DI, while the bears have the edge when -DI is greater. Crosses of these directional indicators can be combined with ADX for a complete trading system. – Source Stockcharts.com
Trend Strength
At its most basic, the Average Directional Index (ADX) can be used to determine if a security is trending or not. This determination helps traders choose between a trend-following system or a non-trend-following system. Wilder suggests that a strong trend is present when ADX is above 25 and no trend is present when below 20. There appears to be a gray zone between 20 and 25. As noted above, chartists may need to adjust the settings to increase sensitivity and signals. ADX also has a fair amount of lag because of all the smoothing techniques. Many technical analysts use 20 as the key level for ADX. – Source Stockcharts.com
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Happy Trading,
Vinny
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