Saturday, February 24, 2007

 
Trading Education Tutorial

Hell's Triangle

The classic Descending Triangle illustrates the painful rollover from bull to bear market better than any other pattern. But why does it work with such deadly accuracy? Most traders don't understand how or why patterns predict outcomes. Some even believe these important tools rely on mysticism or convenient curve fitting. The simple truth is more powerful: congestion patterns in technical analysis reflect the impact of crowd psychology on changes in price and momentum.

Shock and fear quickly follow the first reversal marking a triangle's major top. But many shareholders remain true believers and expect their profits will return when selling dissipates. They continue to hold positions as hope slowly replaces better judgement. The selloff then carries further than anticipated and their discomfort increases. Just as pain begins to escalate, the correction suddenly ends and the stock firmly bounces.

For many longs, this late buying reinforces a dangerous bias that they were right all along. Renewed confidence even prompts some to add to positions. But smarter players have a change of heart and view this new rally as a chance to get out. As they quietly exit, the strong bounce loses momentum and the stock once again turns and fails. Those still riding the issue now watch the low of the first reversal with much apprehension.
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Trading Education Tutorial

Reward:Risk Ratio





Assessing a Trades Potential

When looking at a stock to buy, we look to various tools and techniques to help us assess the probability of its upward movement. However, will it go up is not the only question to ask - we also need to analyze the chart to see how far it is likely to go up and also how much of a loss we are willing to take to allow it to reach it's profit potential. The potential profit of a trade divided by the potential loss of trade is known as the Reward:Risk Ratio.

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NASDAQ Chart of the Day




WFMI took a solid breakaway gap to the upside with big volume, which is highly bullish. Look for continued strength above 48.00.

Daily Trading Signals

 
NYSE Chart of the Day




WEC is holding just beneath key resistance at 48.60, which has held since December. Watch this level closely, as a break or bounce could spark key movement looking forward.

Daily Trading Signals

 
Daily Market Commentary

Updated Thursday, 2/22 for Friday's market.

Key DOW Levels for 2/23

UP

Above 12,800

DN

Below 12,650


Break at 12,700...

- Dow pulls back from morning advance, drops through key support. The index held its ground above 12,650, which could indicate a potential bounce tomorrow.

- The NASDAQ and S&P each sold off steadily throughout the morning, but the NASDAQ led a nice move higher to close the day. The tech-heavy index may spark a broader market reversal tomorrow.

Summary

The Dow closed the day near the lows of the session after dropping sharply to begin the day. The index is holding beneath the 12,700 level, but could continue to honor this zone as a major fulcrum. Watch for continued overall strength above 12,600, unless this level is taken out.

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Thursday, February 22, 2007

 
Trading Ideas & Picks

BJ's Wholesale Club Inc- BJ - Beak out of Trading range

BJ: Break out of its confined trading range suggests the end of its sideways momentum. BJ has traded between the support and resistance of $25.50 and $33 since mid 2005, but today's 52-week high has put an end to this consolidation and traders will now watch for a move higher...

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Trading Ideas & Picks

Swing Trade of the Week

WEBX: Stock surged to new trend highs with a bullish green candle, then traded at the upper end of the bullish breakout candle, representing a consolidation and possible setup for further upside. Look to go long at 48.05...

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Quantum Swing Trader
Exclusive Preview


 
NASDAQ Chart of the Day




GLBL is winding up within the boundaries of a clear triangle, which could offer explosive breakout movement. Watch 14.00 up and 13.00 down.

Daily Trading Signals

 
NYSE Chart of the Day




HOC is holding right at major resisance at 56.00, which has held firmly since last August. An upside break through this level could spark big strength ahead. Watch for a break or bounce away from this level.

Daily Trading Signals

 
Daily Market Commentary

Updated Wednesday, 2/21 for Thursday's market.

Key DOW Levels for 2/22

UP

Above 12,800

DN

Below 12,700


Holding...

- Dow pulls back from yesterday's highs, holds firmly above 12,700. The index closed the day with a 48 point loss, but continues to hold above the key 12,700 level, which is bullish moving forward.

- The NASDAQ and S&P each pushed higher from early lows today, but the tech-heavy index looks much stronger than the broader market. Look for continued upside strength, as it continues to lead higher.

Summary

The Dow ended the day with a loss, but continues to hold above the clear 12,700 fulcrum. Watch for more strength above this zone tomorrow, unless a violation occurs.

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Wednesday, February 21, 2007

 
Daily Stock Picks

Bottoming -

Feb 20 for Feb 21:
ISOND PLXS SINT

(
Stocks making a 52 WK low but closing higher than they opened)


Oversold Stocks
-

Feb 20 for Feb 21:
CBAK CBHI COHU NUVA TCHC WMGI

(Stocks closing higher than they opened, crossing up through their 25 Stochastic level, and on 150% + greater than average 6 month volume)


Volume Pop
-

Feb 20 for Feb 21:
ALTI CORI CYTR ESST GMST IMMU MGRM NEXM PFSW SYNM


(Volume Pop With High ADX & RSI)


More... Stock Picks Page #1

 
Technical Indicators

True Strength Index

The True Strength Index (TSI) is a momentum-based indicator, developed by William Blau. Designed to determine both trend and overbought/oversold conditions, the TSI is applicable to intraday time frames as well as long term trading.

The True Strength Index is a variation of the Relative Strength indicator. It uses a double smoothed exponential moving average of price momentum to minimize choppy price changes and highlight spot trend changes with little or no time lag. An increasing True Strength value indicates increasing momentum in the direction of the price movement.

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Trading Education Tutorial

Measured and Exhaustion Gaps





Identifiable Patterns After Confirmation Move

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?

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NASDAQ Chart of the Day




ACXM is forming a double bottom at key support at 21.75, which has held for a while. Look for a big potential rally from this zone, unless a break occurs.

Daily Trading Signals

 
NYSE Chart of the Day




BA is holding just beneath key resistance at 92.00, which has held firmly since November. Watch 92.00 for a key break or bounce, as big movement could arise.

Daily Trading Signals

 
Daily Market Commentary

Updated Tuesday, 2/20 for Wednesday's market.

Key DOW Levels for 2/21

UP

Above 12,800

DN

Below 12,700


Bounce & Rally...

- Dow reverses from 12,700, rallies steadily to the Close. The index bounce at 12,700 indicates more buying is ahead.

- The NASDAQ and S&P each rallied sharply from the day's lows and now sit above key resistance. Watch for more strength ahead, especially if the current support levels hold.

Summary

The Dow closed the day with a nice advance and continues to hold above the clear 12,700 fulcrum, which is bullish heading into tomorrow's market. Look for continued strength above this zone, unless this fulcrum is violated.

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Tuesday, February 20, 2007

 
Trading Ideas & Picks

Weekly Swing Ideas Report for February 19th - February 23rd

Stock Picks - Long and Short Potential Swing Candidates ... SwingTracker Scans: Trading Window, Force Swings (HD,Home Depot, GG,Goldcorp Inc, RHT,Red Hat Inc, LUV,Southwest Airlines, VCI,Valassis Communications), Triangle (CC,Circuit City Stores, OXY,Occidental Petroleum, TIE,Titanium Metals, FDX,FedEx Corp, VSH,Vishay Intertechnology), Revival, Reversals (AVA,Avista Corp, UHCO,Universal Amer Finl, IDA,Idacorp Inc), and more...

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Trading Ideas & Picks

The QQQQ Report for February 19th - February 23rd

QQQQ: Continues to travel between $43.50 and $45.50. Traders looking to enter the market may be comforted by the nearby support of the 100 DMA, which could be a short-term catalyst that will send the QQQQ back toward the top end of its confined range...

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Trading Education Tutorial

Time Trading

Sophisticated technical indicators evolve from simple data inputs of price and time. While most traders understand how price patterns reveal hidden opportunity, many fail to comprehend how time impacts both tactics and results. Lacking a skilled understanding of opportunity cost, they misinterpret signals and waste valuable resources. Or, trapped in common trend relativity errors, they prepare trades in one time frame but execute them in another.

Opportunity cost defines how the trader manipulates working capital. For example, this important concept reveals why cutting losses efficiently is so important for long term survival. By its nature, taking any stock position dictates that those funds will not be available for another trade. This becomes a critical issue on account drawdowns when individual trades can dictate success or failure for the aspirant.

All trends in the markets are time frame specific. For example, the existence of an uptrend in a daily chart says nothing about the trend in the monthly or intraday chart. This highlights the importance of correct time input in preparing technical indicators or reading chart patterns. When improperly time-tuned, technical analysis loses its effectiveness. Alternatively, resonant time readings will evoke startling accuracy with otherwise mediocre data input
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Trading Education Tutorial

Trendline Breaks





When is a Trend Truly Broken?

The importance of trendlines cannot be overstated when it comes to technical analysis. We are told to trade with the primary trend, exit when the trend reverses, enter on trend reversals, and so on. Trends are easy enough to identify, but when is a trend actually broken?

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NASDAQ Chart of the Day




ARBA took a highly bearish candle to the downside today via an exhaustion gap, which could be a topping pattern. Watch 10.00 for more selling.

Daily Trading Signals

 
NYSE Chart of the Day




CMG took out a key resistance level today via a solid gap at 62.40 and looks primed to head even higher. Watch for more strength above 62.00.

Daily Trading Signals

 
Daily Market Commentary

Updated Friday, 2/16 for Monday's market.

Key DOW Levels for 2/20

UP

Above 12,800

DN

Below 12,720


Still Holding...

- Dow continues holding at highs, stays within tight consolidation. The index closed the day with a very mild 3 point gain, but continues to look positioned for more strength ahead.

- The NASDAQ and S&P each continue to hold within their respective consolidation ranges, which we'll continue to watch for a breakout move. Currently, these ranges point to more upside movement.

Summary

The Dow ended the day with a mild advance to close the session barely higher. The index continues to hold above major resistance, which is promising of more strength. Watch 12,720 and 12,800 for a near-term breakout move Tuesday.

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