Keeping a stock list and checking it…often.

I have been asked how I calculate the buys and sells, as well as the overbought and oversold, for the stocks in the list. I have made as simple as I can. I use a nine-bar Channel Commodity Index (CCI), but RSI, MACD, Stochastic indicators will work too.

Let’s walk through a recent swing on a stock or ETF — in this example, SPY on the chart below.

At the vertical line, SPY is color-coded in blue which means the CCI is below negative 100 and SPY is on a sell, oversold. As the bar turns green and the CCI moves above negative 100, it triggers a buy. As the bar moves to yellow the CCI is above plus 100, SPY is on a buy, overbought. As the bar turns green again and the CCI drops below plus 100, it is on a sell.

Those are the four stages for every stock, ETF, future, option, currency, and commodity in the market as each rotates from oversold to overbought and back again.

Like spinning wheels in the market’s spinning wheel, again and again.