Stochastic Combo

The Stochastic Combo trading strategy is based on the stock price satisfying a combination of conditions of the various technical indicators. For the buy signal, the stock will have to show a long-term up trend, the momentum indicators will have to indicate that the stock is oversold, the RSI will have to be low, and the price will have to be near the lower Bollinger Band, showing starting signs of bounce-back. The figure shows such an example:

Figure 24(a). This is a buy signal from our Stochastic Combo model. The stock is in an up trend and all the indicators (RSI, K/D, MACD and Bollinger Band) show that the stock is oversold. Furthermore, the stock at present has already turned up.

For the sell signal, the stock will have to show a long-term down trend. Momentum indicators will have to signal that the stock is overbought, that the RSI is high, that the MACD is favorable, and that the price is close to the upper Bollinger Band, showing first signs of decline. All this is illustrated in the figure below:

Figure 24(b). This is a sell signal from our Stochastic Combo model.