RE: Example #2 - Archer-Daniels-Midland (ADM)
I\'m using Prorealtime and charting these old charts from 2012 and they look completely different from what you posted below using stockcharts. Any explanation for why?
(2013-03-21, 02:04 PM)isatrader Wrote: Archer-Daniels-Midland (ADM) was said to be in a strong Stage 2 uptrend, and additional buying was recommended on pullbacks towards support around the 30-31 zone. The Trader Stop Loss was given as 28.99 and the Investor Stop Loss was given as 27.99
Trader stop - on the daily chart the last pivot low was 28.11 and so the 28.99 suggested stop loss position was decided by other means. The 6% rule is a potential reason, as from the max entry of 31 that would give 29.14, and so as it's close to a round number and so it would be put just below following the rules. The other possible reason could have been the 200 day MA which was at 29.11 at the time.
Investor stop - 27.99 was the recommended level, which is below the swing low of 28.11 and the 30 week MA, and also just under a round number again. On the daily chart it's under all the MAs, but the reason looks to be solely based on the pivot low for this one imo.
ATR distance to stops - For ADM the ATR(200) was 0.731 at the time of the recommendation and so:Other observations - no notable volume increase on or following the breakout; relative performance versus the S&P 500 was below it's zero line still and divergent from the price action; 30 week MA was flat on the breakout; finally there was near term resistance to around the 32 level. So would only have been considered an average pick per the methods entry requirements, and not the A+ type of stock that the forest to the trees approach was looking for at the time, so am not sure why it was included other than it was in early Stage 2.
- 1.38% to 2.75% ATR - Trader stop range
- 2.75% to 4.12% ATR - Investor stop range