I would hazard a guess that he is using stochastics as a directional indicator, not an overbought or oversold indicator. If they are heading up then buy or if they are heading down, short. He is taking a snapshot of the stochastics.
Surely there is more than one way to use any given indicator. Again, why limit yourself to using stochastics to indicate "oversold" or "overbought". Maybe I based my decision only on the spread between %D and %K at the given time. If more than 23 I go long, less than 23 I go short. (not saying I do that). Even given that - how many possible combinations of period, smoothing, and period can be used to calculate the stochastics? I might use 5, 94, 43. And I might calculate it on the opening price and not the close like is "standard". I might calculate it on the low. I don't limit myself to what is supposedly the "right" way to do it. I'm not looking in the toolbox and trying to figure out what to build based on it. I'm deciding what I want to build first, then trying to see if I can do it with the tools in the toolbox.
Interesting thread Quah. For any eSignal users out there, I've whipped up an EFS which will highlight the 1min fibonacci bars to enter on. 1. download: http://share.esignal.com/download.jsp?groupid=2&folder=&file=fibMarker.efs 2. save to your eSignal formula directory (ie 'C:\Program Files\eSignal\Formulas'). 3. open a 1min ES #F chart. 4. right-click, select 'Add Formulas' -> 'fibMarker.efs'. *IMPORTANT* if you are NOT in the Pacific timezone, do the following: 1. right-click, select 'Edit Studies'. 2. select 'fibMarker' from the drop down list at the top. 3. enter the appropriate startHour/Minute endHour/Minute for your timezone (ie, if you are in the Eastern Timezone, enter '9' and '4'). This is a screenshot of what you should see: http://share.esignal.com/groupcontents.jsp?folder=&picture=fibMarker.png&groupid=2 The grey dots indicate that the NEXT bar will be the fibonacci bar to enter your trade on. The red dots indicate the fibonacci bars themselves.