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changes in SCTR

How quickly can the SCTR of a stock change from day to day? In other words, how likely is it that a stock will have an SCTR rating of, say 75 today and 25 tomorrow? I know there are both short-term and long-term components that go into the calculation of the SCTR, but which exerts the most influence or are they equal weight? The key reason for the question is to decide if using the SCTR is a reasonable tool to use to set stop losses (i.e. "if the stock falls to an SCTR rating of 30 or less, I will sell it" type of thinking).

Thanks in advance for any guidance and thoughts!

Answers

  • markdmarkd mod
    edited October 4
    Here is the Chart School article on SCTRs:

    https://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:sctr

    To get an idea of how the SCTR behaves, you can add SCTR Line from the Indicator drop downs to a chart style and then apply that style to a list of stocks.

    SCTR measures *relative* performance (to other stocks in the *same SCTR category*), so a rising stock could have a falling SCTR if it is rising more slowly than its peers, and a falling stock could have a rising SCTR.

    I think it's probably better to use SCTR in a weight-of-the-evidence approach to trading or investing decisions, rather than as a standalone trigger. Stop losses are meant for disaster prevention or for locking in gains. If SCTR drops suddenly, it's because price has already done so and it's too late. On the other hand if price is continuing to rise, but SCTR is rolling over, taking some profits, or selling out, would be justified. But it would be the pattern, not the absolute levels that would matter.

    An alternative, or a supplement, to experiment with might be Price Performance (relative strength) vs a major index, or a sector or industry, with a middle time frame moving average overlay (maybe 50 or 63). When the RS line crosses above the MA and stays there, the stock is doing well, or is about to. If RS falls below the MA and stays there, it's probably over for a while.

    Possibly you could use an MA with SCTR as well, but I haven't tried it.
  • On your Home Page you can click the check box (click on the Gears on the homepage) for Additional Data Panels. In these you can select the "Top 10, "Ticker Cloud", "DP Signals", etc. Select "SCTR" from the dropdown. There are 4 tabs when you do. The Top, Bottom, Up, and Down. Click on the Up or Down. These are the top 10 in daily change of the SCTR for the Group selected. You can select the Large, Mid, Small, and ETF groups. This will give you some indication of the SCTR changes.

    I wouldn't use the SCTR as a stop indicator. I'd use a price indicator for that. Much more reliable.
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