Pimp My Trade

5 Ways to Hack Stockcharts.com and Beat the Market

Posted on June 10, 2009 by Adam

Let me start off by saying that I’m no computer hacker. I wish I could tell you how to hack into the Nasdaq mainframe and pilfer money from each transaction that occurs. I wish. Then again, if that were the case I wouldn’t need to trade, now would I.

What I can teach you are some of the tricks I’ve discovered on stockcharts.com that nobody knows about. If you use them wisely, you may find yourself a little bit richer. If you want to get access to all of the strategies I use, you should download my new eBook, which covers everything from market basics to winning strategies.

Track the Crack (spread)

I couldn’t resist the catchy headline, but in all seriousness, following the crack spread can help you to be profitable trading the refiners.

What is the crack spread? The crack spread is the difference between the price of gasoline and the price of crude oil. The process of converting crude to gasoline is what of oil refiners do, and is referred to as “cracking,” hence the name.

The crack spread has been very good for refiners lately.

When oil is cheap relative to gasoline, refiners like HES, VLO, and TSO are more profitable, since they can buy crude cheaply and sell gasoline at a higher price.

So how does stock charts fit in? They allow you to compare the price of oil and gas conveniently on a relative strength chart. The ticker symbol for crude is $wtic and the symbol for gasoline is $gaso. If you type $gaso:$wtic into the symbol field and plot a sharpchart, you will get a direct relative strength comparrison of the two commodities. View it as a line chart over a period of a year for the best results.

When this value gets to be high, the crack spread is favorable for the refiners, and you should look to buy into any weakness in the group. Likewise, when the crack spread is poor, you should look to be short the refiners, or at least avoid any longs.

Scan for Candlestick Patterns

If you like trading candlestick patterns, you can take the legwork out of it by using stockcharts’s automatic scanning engine.

The link above gives you access to a ton of different scan criteria. If you scroll down to the Candlestick Patterns heading, you will find a list of all the different patterns and how many stocks fit the criteria.

Most people don’t know this, but a paid membership will allow you to create your own custom scans with as many criteria as you want. Finviz will do this for free, but stockcharts has some cool features like point and figure patterns that Finviz doesn’t have.

Understand Market Posture with Bullish Percent

If you type $BP into the symbol box and hit go, it will give you a rundown of all the different bullish percent indexes.

Alternatively, you can use this link.

If you have never used bullish percent before, they are an excellent resource. I check each sector’s bullish percent value each morning before the market opens. The granddaddy of all bullish percent indicators is the $BPNYA, which tallies up the number of stocks on the entire New York Stock Exchange that are on buy signals. It is the most reliable indicator, in my mind, of market posture.

For more on bullish percent, read my book. I’ll remember to do a post on bullish percent at some point.

$NYA200R - How many stocks are above their 200 day moving average

This ticker symbol tells you just that, but it doesn’t just tell you, it gives it to you in visual form. This is a very reliable indicator of how bullish things are for the long term, similar to the $bpnya.

Much in the way $bpnya looks at how many stocks are on buy signals within the NYSE, the $NYA200R gives you a good idea of how many stocks are above their 200 day moving average, which is watched by almost all major market players.

You can also use $NYA50R for the 50-day moving average and $SPXA… and $NAA… for the S&P and Nasdaq, respectively.

View Volume by Price

This has to be one of my favorite hacks. I was amazed when I discovered it, because it’s been extremely helpful.

If you are familiar with trading market profile, it should be pretty clear how cool this is, but if you’ve never used market profile before, here’s why it’s awesome.

Prices tend to change quickly when they reach a price level where very little volume has been traded. They move slowly in price ranges of high volume. This means that when price breaches into low-volume territory, opportunities for profit arise. We’re familiar with this phenomenon in the form of breakouts.

Knowing where the low-volume “pockets” are can help you see breakouts before they happen. For example, look at the chart of the S&P with volume by price overlaid. If you look at the volume profile, you can see that volume drops off at 950. I’m convinced that if we trade above 950 and hold, an explosive move will occur to the upside.

Look at the volume pocket sitting above 950. If we breach 950, there will be a big breakout through the pocket.

It would be much harder to determine this without the aid of volume by price.

To get volume by price on stock charts, go to a normal sharp chart.

Once there, find where it says “overlays”. Click the dropdown and select “Vol by Price”.

Chart away.