A Daily Swing Trade

There are various chart patterns that help us find good reversal candidates. Of the major reversal patterns, the double top or bottom is not only one of the most recognizable, but also one of the most predictive.

- Dow continues to honor resistance at 11,400, sets up for big move away from this level. The index continues to honor this key resistance level, which could make for a much bigger move away from this level once direction is established.

- The NASDAQ and S&P each traded sideways throughout the session within the boundaries of clear consolidations. Watch these ranges for movement tomorrow.

Summary

The Dow ended the day with a minor loss today, but continues to be rejected by the 11,400 resistance level. Watch for a big break or reversal to occur from this level in the near term. Such a move could spark movement not seen in three weeks.

MIKR has broken a small triangle range to the upside and has a load of bullish momentum behind the breakout. Watch for much more strength ahead from this stock.

AXE is consolidating at the highs of the latest advance. A breakout from this consolidation is very likely to spark the next key move in this stock. Watch 57.75 up, and 54.00 down.

- Dow rallies to 11,400, holds to the Close. The index closed with a gain of just 13 points and is now holding beneath the 11,400 level, which we will continue to watch.

- The NASDAQ and S&P each pushed to new highs today, but did so in a cautious manner. Look to resistance for a much bigger break or bounce tomorrow.

Summary

The Dow closed the day with a mild gain after testing the waters above 11,400. This is clearly the level to watch for major directional movement tomorrow. Watch for a break or bounce away from this zone for a tradable move.

Leonardo Fibonacci da Pisa was a thirteenth century mathematician who (re) discovered what is today known as the Fibonacci sequence. Adding 1+1 and then continuing to add the sum to the previous number will arrive at this numerical sequence. The sequence gives rise to the following numbers: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55 and so on.

SAFM got a solid breakaway gap today on high volume, which is very bullish. Watch for continued overall strength from this stock ahead.

EME is winding up within the boundaries of a clear triangle range. A breakout from this range could spark another nice move in this stock. Watch 56.00 up, and 53.00 down.

We have previously mentioned the three types of gaps that are of relevance to investors - the breakaway gap, the measured (or continuation) gap, and the exhaustion gap. We previously discussed the breakaway gap, but it is important to discuss the measured gap and exhaustion gap at the same time. Why? Because it is difficult to tell one from the other until after the fact.

- Dow drops throughout session, but gets solid late-day rally back to key resistance. The index is now holding at resistance once again, which we will continue to watch for big movement.

- The NASDAQ and S&P each reversed sharply from the day's lows and powered solidly higher to the Close. Each is now testing key resistance, which could lead to big moves ahead.

Summary

The Dow ended the day back at key resistance after a solid afternoon rally. Watch this resistance level closely tomorrow, as a break or bounce could lead to another big move.

Psychologist, Dr. Daniel Kahneman (The Nobel prize in economics - the field of behavioral economics) basically shows that investors are irrational, but predictably irrational. They continue to make the same mistakes over and over. One of the biggest is a common inability to take a loss: taking a loss is so painful, it is simply avoided.

A trader's most valuable commodity is trading capital. What is the most important rule for a trader? Preserve your capital. This is what keeps a trader in the game, and it is foolish to do anything that will jeopardize it. Subsequently, to preserve a trader's capital, there are rules that help a trader, whether in short, intermediate or long term play.

The rules listed below are suggestions. Only the trader can decide which rule is important. However, when a trader decides on a set of rules, they should be used consistently. Rules make up a trader’s system and are enforced by discipline.

ANAD has gotten a solid upside break through a clear upper trend line via a breakaway gap on high volume, which is bullish. Watch for continued strength from this stock.

ANAD has gotten a solid upside break through a clear upper trend line via a breakaway gap on high volume, which is bullish. Watch for continued strength from this stock.

There are various forms of consolidation and they occur anytime there is an equilibrium of buyers and sellers. One of the most predictive consolidation formations is the triangle.

SFD is holding precisely at resistance at 29.65, which has held in tact since April. Watch this zone for a break or reversal for the next key move.

- Dow breaks upper trend line, rallies to resistance at 11,385. The index closed the day with a nice 68 point gain, but continues to be stumped by the 11,385 resistance level, which we will continue to watch closely.

- The NASDAQ and S&P each pushed to new highs today, but continue to struggle at near-term resistance. Watch today's late-day range for further directional clues tomorrow.

Summary

The Dow ended the day with a solid gain after breaking through a clear upper trend line. However, the major 11,385 resistance level held firmly once again. Watch this zone for continued overall strength; otherwise, continued range movement is likely between 11,250 and 11,385.

- Dow breaks upper trend line, rallies to resistance at 11,385. The index closed the day with a nice 68 point gain, but continues to be stumped by the 11,385 resistance level, which we will continue to watch closely.

- The NASDAQ and S&P each pushed to new highs today, but continue to struggle at near-term resistance. Watch today's late-day range for further directional clues tomorrow.

Summary

The Dow ended the day with a solid gain after breaking through a clear upper trend line. However, the major 11,385 resistance level held firmly once again. Watch this zone for continued overall strength; otherwise, continued range movement is likely between 11,250 and 11,385.

Some stocks move multiple points and multiple directions in one trading session. Other stocks are more methodical in their day-to-day movement. Which type of stock is more attractive to you as an investor?

Aug 28th: GG is winding up within the boundaries of a large triangle range that has formed after a severe decline in May. A breakout from this range will likely spark the next key directional move in this stock. Watch 31.75 up, and 28.00 down.

FRED has pulled back to 62% Retracement after dropping from May to July. The stock is now beginning to fizzle out at 62% and could drop to new lows soon. Watch 12.50 for continued weakness.

- Dow strades sideways yet again, holds within tight range around 11,300 level. The index closed the day quietly with a 20 point loss, but should get more movement next week.

- The NASDAQ and S&P each continue to trade slowly and steadily sideways. Look for a confirmed breakout opportunity for direction Monday.

Summary

The Dow closed the day quietly today, and continues to hold within the boundaries of a tight range just above key support at 11,250. If the Dow can remain above 11,250, the index will have a solid shot at continued overall strength. Otherwise, a break through support could spark big selling.