Monday, May 07, 2007

 
Technical Indicators

Average Directional Movement Index Rating

The Average Directional Movement Index Rating (ADXR) is an attempt to quantify momentum change in the ADX. It is calculated by adding the current ADX value and an ADX value n periods back then dividing that sum by two.

This smoothing step results in the ADXR being slightly less responsive than the ADX. Where the ADXR shines is its ability to compensate for the variance of excessive tops and bottoms. It is especially helpful when used in conjunction with trend-following strategies. Strategies that rely on volatility as an indication of movement often fail to take into account movement does not necessarily indicate volatility. ADXR provides information pertaining to the strength of a trend, helping to manage the risk of trading in volatile markets that fluctuate between trending and non-trending. The interpretation of ADXR is the same as that for ADX, the higher the value, the stronger the trend

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Trading Ideas & Picks

Weekly Market Recap April 30th - May 4th

May 7, 2007 - The longer term trend is up. Keep your eyes on the 20 day EMA for clues on the sustainability of the current uptrend. The short term trend is up. We do remain cautious with the Stochastics in an overbought condition. Keep a close watch on the Hourly MAs for signs of a change in trend. ...

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Trading Ideas & Picks

The QQQQ Report for May 7th - May 11th - Overbought RSI

QQQQ: Friday's move to a new six-year high clearly shows that the bulls are in control, but as you can see from the chart below, many traders will likely pay attention to the overbought RSI reading (69.69) because the indicator is suggesting that the bull run may be getting overextended...

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Trading Education Tutorial
Courtesy of Nirvana Systems

Island Reversals





Stand Alone Formation Speaks Volumes

Reversals tend to occur slowly, with securities forming double bottoms, higher lows, head and shoulders patterns, etc. before starting a new trend. However, sometimes we see a dramatic reversal immediately, and one of the best indications of these types of reversals is Island Tops and Bottoms.

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NASDAQ Chart of the Day
Courtesy of Nirvana Systems




INAP has pulled back 50% of the prior rally and is now headed back to the upside on increased volume. We could see new highs fairly soon in this stock.

Daily Trading Signals

 
NYSE Chart of the Day
Courtesy of Nirvana Systems




OMX sold off heavily yesterday, but reversed sharply today in what looks like a potential volume climax reversal. The volume has increased in big fashion and could help to spark a key upside reversal from current levels. Watch 46.00 for more strength.

Daily Trading Signals

 
Daily Market Commentary
Courtesy of Nirvana Systems

Updated Friday, 5/4 for Monday's market.

Key DOW Levels for 5/7

UP

Above 13,300

DN

Below 13,175


Still Consolidating...

- Dow pulls back from early highs, continues to build out key range. The index closed the day with another gain of 23 points and continues to hold at overall highs.

- The NASDAQ and S&P each reversed sharply from early gains this morning, creating a potentially bearish pattern. The indexes have been highly bullish lately, but this pattern could bring about near-term weakness.

Summary

The Dow closed the day with another gain, as the index continues its blistering pace higher. The index is now building out a range from 13,200 to 13,300, which we will want to watch as it determines its next key directional move.

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