buy signal

Relative Strength Buy Signal & Chaikin Money Flow Buy Signal: How To Use Them To Your Advantage

What if you had an alarm that could alert you to buying opportunities for stocks favored by Wall Street’s biggest players, and stocks outperforming the market?

That’s exactly what Chaikin Analytics created with two of its Chaikin Buy Signals. Each Buy Signal is designed to combat one of the most common problem investors face: knowing when to buy.

The two signals in question? The Chaikin Analytics Relative Strength Buy Signal and Chaikin Money Flow Buy Signal. Here’s a quick overview on what these powerful signals do and how to use them.

The Relative Strength Buy Signal: “Hey! This Stock Is Beating The S&P!”

Relative Strength is the measurement of a stock’s price against a stock market index, often the S&P 500 Index. Investors use this to compare stock activity to the overall market. A stock beating the S&P 500, for example, is doing well. Matching or under-performing it, on the other hand, is not so great.

Chaikin Analytics takes this indicator and turns it into a signal, alerting you that a stock is starting to outpace the market and it may be a good time to buy. How does it do this? The Relative Strength Buy Signal in Chaikin Analytics triggers when a stock that has been outperforming the market trades under its 21-day average price and then moves back above its 21-day average.

This is a great tool for any trader to have at their disposal. It’s an especially useful signal for swing traders and investors looking to establish or add to a position. Because the typical duration of the signal is 4-8 weeks, the Relative Strength Buy Signal is great for “buy and hold” investors.

The Chaikin Money Flow Buy Signal: “Psst: Wall Street Really Likes This Stock”

Marc Chaikin created Chaikin Money Flow in the early 1980s to measure buying pressure (accumulation) vs. selling pressure (distribution) of a stock. Money Flow Persistency (significant stretches of strong or weak Money Flow) can be a good sign that big Wall Street institutions are accumulating or selling the stock. These Wall Street giants try to hide their tracks so as not to alert other investors to what they’re doing, but Chaikin Money Flow is a way to track this data.

Harnessing this indicator, the Chaikin Money Flow Buy Signal triggers when a stock with positive Chaikin Money Flow crosses over its rising short-term trend, and its Chaikin Power Gauge stock rating is Bullish.

This signal is ideal of options and swing traders who want to position their trades on the same side as the pros. It is a trading buy signal that usually works in a 1-3 week time horizon.

Visit the User Guide for more information on Chaikin Analytics Buy and Sell Signals.