Tom Demark TDSETUP Screener

[magictrader]

I have created a screener formula for Strategy Desk that mimics the Tom Demark TD Setup.


Theory

The idea is to find stocks that may be nearing the exhaustion point of a trend. Tom's theory is that after 9 consecutive days that his criteria is true, a reversal could take place.

http://i59.photobucket.com/albums/g296/tonygal/td.jpg

If you are familiar with Strategy Desk formulas, his "TD Setup Buy signal" from the above table is basically the number of consecutive days that this is true

Bar[Close,D,0] < Bar[Close,D,4]

and for Uptrends, the "TD Setup Sell signal" from the above chart is basically the number of consecutive days that this is true

Bar[Close,D,0] > Bar[Close,D,4]

Since Tom's strategy doesn't act on any consecutive count from 1-8, I chose to ignore them in my screener. So I only pay attention once the count reaches 9 or higher This is not a purist interpretation of his idea, but it does filter out the counts until they actually matter.


Screener Formulas

To run the Buy-side in a screener, this formula will work

{Downtrend Count at 9 or higher}
(
Bar[Close,D,0] < Bar[Close,D,4] AND
Bar[Close,D,1] < Bar[Close,D,5] AND
Bar[Close,D,2] < Bar[Close,D,6] AND
Bar[Close,D,3] < Bar[Close,D,7] AND
Bar[Close,D,4] < Bar[Close,D,8] AND
Bar[Close,D,5] < Bar[Close,D,9] AND
Bar[Close,D,6] < Bar[Close,D,10] AND
Bar[Close,D,7] < Bar[Close,D,11] AND
Bar[Close,D,8] < Bar[Close,D,12]
)

To run the SELL-side in a screener, this formula would work

{Uptrend Count at 9 or higher}
(
Bar[Close,D,0] > Bar[Close,D,4] AND
Bar[Close,D,1] > Bar[Close,D,5] AND
Bar[Close,D,2] > Bar[Close,D,6] AND
Bar[Close,D,3] > Bar[Close,D,7] AND
Bar[Close,D,4] > Bar[Close,D,8] AND
Bar[Close,D,5] > Bar[Close,D,9] AND
Bar[Close,D,6] > Bar[Close,D,10] AND
Bar[Close,D,7] > Bar[Close,D,11] AND
Bar[Close,D,8] > Bar[Close,D,12]
)


Running a scan after the market close can help identify overbought or oversold stock candidates. As we know, just because something has been going up (or down) 9 days in-a-row, doesn't mean it can't keep going another 9. So don't blindly follow any indicator.


Adding the "Perfection" criteria to the Screener

To add the perfection criteria in Tom's table, add this code to the Buy-side screener:


{Perfection Buy}
...all of the above BUY-side conditions...
AND
(
(Bar[Low,D,0] < Bar[Low,D,2] AND Bar[Low,D,0] < Bar[Low,D,3])
OR
(Bar[Low,D,1] < Bar[Low,D,2] AND Bar[Low,D,1] < Bar[Low,D,3])
)

and for the sell-side screener

{Perfection Sell}
...all of the above SELL-side conditions...
AND
(
(Bar[High,D,0] > Bar[High,D,2] AND Bar[High,D,0] > Bar[High,D,3])
OR
(Bar[High,D,1] > Bar[High,D,2] AND Bar[High,D,1] > Bar[High,D,3])
)


I have found this screener to be quite useful and profitable. I tend to use it as one scan to identify overbought/oversold candidates, and then use my personal trading preferences to determine entry and exits.

Any questions, just ask.

Thanks
Tony