Tuesday, May 8, 2007
Balance of Power Indicator on Worden Telecharts
When I used to trade a lot of earnings plays, one of the technical tools I used was the BOP indicator on Worden Telecharts. The BOP indicator tells you whether block trades over 10k shares are trading on upticks or downticks. I usually scan for one of two patterns: either confirmation of an existing trend, or signs of a trend reversal. For example, suppose a stock you're watching is in an uptrend for anywhere between ten days and two months. If prior to an earnings release, the BOP is red or a negative value and the stock continues to climb, I'm more likely to either sell or short the position before the earnings release. Now some may balk at the $100/month cost for Telecharts. But in my personal experience, that $100 has saved me from many potential catastrophes.