Thursday, June 21, 2007

 
Trading Ideas & Picks

American Electric Power Co- AEP - Testing the support levels

AEP - Today's decline was stopped by the combined support of the 200-day moving average and a twelve-month trendline. Technical traders will keep a close eye on this stock at current levels because two consecutive closes below the mentioned support will cause many speculators to lower their price targets to $38.50...

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Trading Ideas & Picks

Swing Trade of the Week

INSP: Stock’s bearish gap down in mid May put this stock into a downtrend. Stock has since rallied up to the downtrending MAs where it has found initial resistance. Look to go short at 22.89...

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Technical Indicators

Zig Zag

The Zig Zag indicator shows past performance trends and only the most significant changes. It does this by filtering out any changes less than a specified amount.

The Zig Zag indicator is used primarily to help you see changes by highlighting the most significant reversals. Understand that the last segment in a Zig Zag chart can change based on changes in the underlying plot, price being only one example. That is, a change in a security's price can change a previous value of the indicator. Since the Zig Zag indicator adjusts its values based on subsequent changes, it has perfect hindsight into what prices have done. Do not try to create a trading system based on the Zig Zag indicator, as it to be used to illustrate historical patterns.

The Zig Zag indicator is calculated by placing imaginary points on a chart when prices reverse by at least the specified amount. Straight lines are then drawn to connect these imaginary points. Any changes in prices that are less than the specified amount are ignored.

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Trading Education Tutorial
Courtesy of Nirvana Systems

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
Courtesy of Nirvana Systems




FTEK took a big upside break through major resistance at 30.00, which had held firmly over the last five months. This breakout could spark much more strength ahead, especially if 30.00 remains in tact.

Daily Trading Signals

 
NYSE Chart of the Day
Courtesy of Nirvana Systems




BW has taken a big breakaway gap to the downside through the bottom of a clear triangle range on increased volume, which is a bearish combination. Look for more weakness from this stock, likely back toward the 31.00 range.

Daily Trading Signals

 
Daily Market Commentary
Courtesy of Nirvana Systems

Updated Wednesday, 6/20 for Thursday's market.

Key DOW Levels for 6/21

UP

Above 13,700

DN

Below 13,400


Late-Day Sell-Off...

- Dow holds within consolidation throughout session, but sells off late in the day. The index finally got a big downside break from the pattern at 13,570 and dropped hard to the Close for an eventual 146 point loss.

- The NASDAQ and S&P each broke clear ranges to the downside late in the day, making key selling pressure. Watch for more weakness beneath the bottom of these ranges.

Summary

The Dow ended the day with clear selling pressure after breaking the key consolidation to the downside. More downside movement could be seen within the larger range, but watch 13,600 for any snap-back reactions.

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Technical Indicators

Intraday Momentum Index

Developed by Tushar Chande, the Intraday Momentum Index is a combination of the Relative Strength Index and Candlestick Analysis.

The IMI is calculated like the RSI but uses the relationship between the intraday opening and closing prices to determine whether the day is up or down. When the close is above the open, it is an up day. If the close is below the open it is a down day. White candlesticks signify an up day, black candlesticks used for down days.

As with the RSI, overbought conditions (and lower prices ahead) are indicated when the index rises above 70. Values below 30 indicate a potential oversold situation and higher price ahead. Remember, as with all overbought/oversold indicators, you should first quantify the trendiness of the market before acting on any signals...

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Trading Ideas & Picks

Runaway Moves (Gann)

In our last article, we focused on W.D. Gann's innovative brand of price and time analysis, especially as pertaining to the time periods of measured corrections. So-called “runaway moves” comprise a unique and highly profitable subset among time periods, affording the alert speculator the greatest opportunity to profit in the shortest time. During these dramatic moves, options prices traditionally experience their greatest increases in value...

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Trading Education Tutorial
Courtesy of Nirvana Systems

Trendlines




Determining Market Reversals and Continuations

Trendlines are perhaps the oldest tools known to chartists. Trendlines form across peaks and valleys called pivot points - relative highs and lows in a chart. As more points form along a line, it becomes more "established". This means that, when the line is broken, it will likely follow through with a strong move in the new direction.

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NASDAQ Chart of the Day
Courtesy of Nirvana Systems




MCHP took a large breakaway gap to the downside after topping out at key resistance at 42.40. The gap occurred through a clear lower trend line on increased volume, which could make for much more selling ahead.

Daily Trading Signals

 
NYSE Chart of the Day
Courtesy of Nirvana Systems




FDS has taken a solid breakaway gap to the upside through the top of a clear continuation pattern at 64.50, which could offer much more strength ahead. Look for continued strengh ahead, especially if 65.00 remains untouched.

Daily Trading Signals

 
Daily Market Commentary
Courtesy of Nirvana Systems

Updated Tuesday, 6/19 for Wednesday's market.

Key DOW Levels for 6/20

UP

Above 13,725

DN

Below 13,550


Still Consolidating...

- Dow trades quietly again, remains within tight consolidation. The index managed to gain a modest 22 point gain, but remains at overall highs beneath major resistance.

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