SDMAX was developed by Lincoln Indicators following extensive back-testing on Star Stocks over a 10 year period.
Stock Doctor’s 4/13-week High/Low Simple Moving Average crossover (weekly) indicator, identifies bullish and bearish trends to assist with entering and exiting the stock.
This strategy is suitable for investors who are very sensitive to price declines and are therefore willing to be very active tracking share price trends in the management of their portfolio which will experience increased stock churn. They wish to capture as much Star Stock performance as possible however, as the are more sensitive to price declines will cut losses earlier to avoid (potentially) greater loss.
This indicator displays the following moving averages:
- Slow (13 week) simple moving average of the high and low price
- Fast (4 week) simple moving average of the high and low price
How to apply:
Essentially, investors using this indicator, look for the bullish and bearish crossover points (both lines must cross each other) to determine when to enter and exit the stock.
The Entry trigger occurs when both fast moving averages cross above both slow moving averages. When the fast moving average of the low is above the slow moving average of the high, the stock price is considered Bullish (i.e. in an uptrend). This is indicated by a shaded (Green Bullish zone) on the chart.
The stock remains Bullish until the Sell trigger occurs, which is when both fast moving averages cross below both slow moving averages. When the fast moving average of the high crosses below the slow moving average of the low the stock price is considered Bearish (i.e. in a downtrend). This is indicated by a shaded (Bearish red zone) on the chart.
The use of a weekly time frame, means the indicator is not too sensitive and will still catch the majority of Star Stock performance.
9 Golden Rules Screen
SDMAX is accessible via the Nine Golden Rules Page under Golden Rule 4 via the top Menu.
- Navigate to any company 9 Golden Rule screen
- Under Golden Rule 4
- Select SDMAX Indicator
Advanced Charting Tool
You can apply SDMAX in the Advanced Charting Tool. Select it from the Layouts Menu or the Studies dropdown menu.
- Navigate to the Advanced charting tool (Tools > Advanced Charting Tool)
- Click on the Layout drop-down menu
- Select SDMAX
- Click Studies
- Select SDMAX Indicator
Use Alerts to let you know when the SDMAX trend changes from bullish to bearish and vice versa.
- Navigate to the Alert Manager (Tools > Alert Manager)
- Click Create New Alert
- Enter company code
- Select Price Alerts Tab
- Select either SD Bullish MA Crossover (SDMAX) or SD Bearish MA Crossover (SDMAX).
- Optional: Tick email me if this alert is triggered.
- Select Save
SDMAX is built into the existing Star Stock filters. Simply, select one of Lincoln’s Star Stock Filters, then click ‘Run’.
- Navigate to the Stock Filter (Tools > Stock Filter)
- Click on an existing Lincoln Star Stock Filter
- Click Run
- Scroll to the far right of results: SDMAX Status column.
If you’re filtering the market for bullish or bearish stock prices you can also build SDMAX into your Custom Filters.
- Select Build a New Filter
- Enter a Filter Name
- Create New Stock Filter
- Click (+) Add Criteria
- Click Select Option
- Select SDMAX Status
- Select Operator Bullish , Bearish, Neither
- Click Run
SDMAX is available in Watchlists within Stock Doctor’s Views: Growth, Income and Daily (SDMAX Status) and it’s a field available when building your custom Watchlist views.
- Navigate to Watchlists (Tools > Watchlists)
- Select View drop-down
- Select Growth, Income and Daily
- Scroll to the far right column: SDMAX Status
Add to a custom Watchlist View
- On the right of View
- Click Edit button
- Select Create New Watchlist View
- Enter user defined view name
- Select SDMAX Status from available fields along with any other fields you would like in your view
- Click on the (>) Button
- Click Save
- Suits those who are highly sensitive to drawdowns in their stocks.
- Cuts deep price losses (drawdown) sooner than the passive or SD30STR approach.
- Gets into up-trending stocks sooner than the SD30TSR.
- Weekly reviews mean investors are less prone to false signals.
- Increased churn compared to other stop loss methods.
- Be prepared for more losing trades.
- If investors apply this strategy incorrectly i.e. do not back in, then it will cost them.
- If the previous uptrend was very strong, it may take some time for the averages to revert which could become a big draw down.
** This document has been prepared by Lincoln Indicators Pty Limited ABN 23 006 715 573, as Corporate Authorised Representative of Lincoln Financial Group Pty Ltd ABN 70 609 751 966, AFSL 483167. This document may contain general financial product advice. It has been prepared without taking account of your personal circumstances (including your objectives, financial situation or needs) and you should therefore consider its appropriateness in light of your objectives, financial situation and needs, before acting on it. You should read and consider our Disclaimer for more Important Information and our Financial Services Guide (FSG) which sets out key information about the services we provide. The Disclaimer and FSG are available at www.lincolnindicators.com.au .
The SD30TSR and SDMAX (Indicators) have been identified through a rigorous research process using historical price data against Star Stock selections. Each Indicator has its strengths and weaknesses. The information contained within the Indicators is for general information purposes only. It is not intended as investment advice, or as recommendations to buy, sell or hold a stock and is not to be relied upon as such. Past performance is not an indication of future returns.
Lincoln specifically disclaims any liability (whether based in contract, tort, strict liability or otherwise) for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with access to or use of these Indicators.
Except as provided by consumer protection law, under no circumstances will Lincoln Indicators and its related companies be liable for any loss or damage caused by a client’s use or access to the Indicators. Contact our office should you required assistance on how to apply these indicators correctly.
Lincoln Financial Group Pty Ltd and its directors, employees and/or associates of these entities may hold interests in ASX listed companies. This position is disclosed within the Stock Doctor program and may change at any time without notice.
No part of this document may be copied, duplicated or reproduced without the permission of Lincoln Indicators Pty Ltd.
Copyright © 2018 Lincoln Indicators Pty Ltd