Thursday, August 02, 2007

 
Technical Indicators

Polarized Fractal Efficiency

Developed by Hans Hanula, the Polarized Fractal Efficiency indicator draws on Mandelbrot and fractal geometry to illustrate the efficiency of how pricing moves between two points over time. The more linear and efficient the price movement, the shorter the distance the prices must travel.

Use the PFE indicator to measure how trendy or congested the price action is. PFE readings above zero indicate that the trend is up and the higher the reading the "trendier" and more efficient the upward movement. PFE readings below zero mean that the trend is down. The lower the reading the "trendier" and more efficient the downward movement. Readings near zero indicate choppy, less efficient movement and a balance between supply and demand.

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Trading Ideas & Picks

Firstenergy Corp - FE - At 200-day moving average Resistance

FE: - Stock recently broke below the neckline of a head-and-shoulders pattern and it has also closed below the 200 DMA for the first time since April 2006. The move back toward the neckline, also known as a throwback, is a common occurrence and traders will now watch for a bounce off the trendline as the bears attempt to control the momentum...

Trading Picks - Read More

 
Trading Education Tutorial
Courtesy of Nirvana Systems

Saucer Patterns





Rare Pattern Is One of the Most Predictive

One of the most predicitive chart patterns you will come across is the saucer pattern. Saucers are also referred to as "bowls" or even "rounded tops or bottoms", and one look at this pattern tells where these names are derived from. However, there is a problem with saucer patterns - they're hard to find.

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NASDAQ Chart of the Day
Courtesy of Nirvana Systems




BBBB took a large gap down through a clear lower trend line at 42.00 today and closed right at support at 37.50. A break through this zone will indicate much more weakness ahead.

Daily Trading Signals

 
NYSE Chart of the Day
Courtesy of Nirvana Systems




BVN looks to be forming a clear head-and-shoulders pattern at highs above the 38.00 neck line (support level). If the stock can remain above this zone, we could see more strength ahead. Otherwise, a downside break could spark big selling pressure back toward the 30.00 range.

Daily Trading Signals

 
Daily Market Commentary
Courtesy of Nirvana Systems

Updated Wednesday, 8/1 for Thursday's market.

Key DOW Levels for 8/2

UP

Above 13,500

DN

Below 13,125


Huge Late-Day Rally...

- Dow trades back and forth throughout session, rallies 250 points into the Close. The last 35 minutes of the day were straight up for the Dow, which eventually closed with a nice 150 point gain, and the index is now testing a steep upper trend line that could be 'in play' tomorrow.

- The NASDAQ and S&P each pushed sideways through much of the day, but ended the session on a highly bullish note. Look for potential near-term strength above today's lows.

Summary

The Dow ended the day with a nice rally and could be on a roll if the upper trend line is crossed at 13,400 tomorrow. However, if the index cannot rise above 13,500, more sideways-to-down movement is likely.

Read More...

Wednesday, August 01, 2007

 

Instant Profits @Profits Run

Fibonacci retracement lines video

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Instant Profits (IP) Trading Video


 
Technical Indicators

Chaikin Money Flow

Developed by Marc Chaikin, the Chaikin Money Flow compares total volume to the closing price and the daily highs and lows to determine how many issues are bought and sold of a particular security. It is based upon the assumption that a bullish stock will have a relatively high close price within its daily range and have increasing volume. However, if a stock consistently closed with a relatively low close price within its daily range with high volume, this would be indicative of a weak security. There is pressure to buy when a stock closes in the upper half of a period's range and there is selling pressure when a stock closes in the lower half of the period's trading range. Of course, the exact number of periods for the indicator should be varied according to the sensitivity sought and the time horizon of individual investor.

An obvious bearish signal is when Chaikin Money Flow is less than zero. A reading of less than zero indicates that a security is under selling pressure or experiencing distribution.

A second potentially bearish signal is the length of time that Chaikin Money Flow has remained less than zero. The longer it remains negative, the greater the evidence of sustained selling pressure or distribution. Extended periods below zero can indicate bearish sentiment towards the underlying security and downward pressure on the price is likely...

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Trading Education Tutorial
Courtesy of Nirvana Systems

Volatility



Well Behaved Stocks Reap Rewards

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?.

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NASDAQ Chart of the Day
Courtesy of Nirvana Systems




NVDA may have formed a double-top resistance level at 47.85 after steadily trending higher since March. If the stock cannot rise above 47.90, we could see a key retracement soon.

Daily Trading Signals

 
NYSE Chart of the Day
Courtesy of Nirvana Systems




AHS is holding above a clearly defined support level at 20.80, which has held firmly since March. If the stock can continue to hold above this zone, we could see a nice bounce higher. Otherwise, a break could send the stock tumbling.

Daily Trading Signals

 
Daily Market Commentary
Courtesy of Nirvana Systems

Updated Tuesday, 7/31 for Wednesday's market.

Key DOW Levels for 8/1

UP

Above 13,500

DN

Below 13,200


Pop & Drop...

- Dow opens strong, but eventually tumbles to the Close. The index eventually closed the day with a 146 point loss and is now testing the major 13,200 support level.

- The NASDAQ and S&P each sold off heavily from early highs. This action sparked the formation of a potential lower high pattern, which is typically a continuation pattern. Watch support for signs of more selling pressure.

Summary

The Dow closed the day at the lows of the session just above critical support at 13,200. Continue to watch this zone closely for signs of a potential break or bounce.

Read More...

Tuesday, July 31, 2007

 
Trading Education Tutorial

Pattern Cycles: Reversals

No chart pattern better illustrates this slow evolution from bull market to bear decline than the Descending Triangle. Within this simple structure, the trader examines how life drains slowly from a dynamic uptrend. Variations of this destructive formation precede more breakdowns than any other reversal. And they can be found doing their dirty deeds in all time frames and all markets.

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 reflect the impact of crowd psychology on changes in price and momentum.
..

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Trading Education Tutorial
Courtesy of Nirvana Systems

Breakaway Gaps





Pressure Helps Identify Movers

Gaps occur when there is a dramatic change in market conditions. They can occur at the beginning of a trading session (i.e. most NASDAQ stocks) or even during the session itself. There are three types of gaps that are of interest to us when we analyze charts: breakaway, measured (also known as continuation) and exhaustion gaps. Today we will discuss the breakaway gap.

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NASDAQ Chart of the Day
Courtesy of Nirvana Systems




GOOG looks to be forming a large head-and-shoulders pattern with a neck line (support) at 498.80. A break through this support level could spark much bigger weakness ahead, likely toward a target of about 460.

Daily Trading Signals

 
NYSE Chart of the Day
Courtesy of Nirvana Systems




ABX has turned up from the 38% Fibonacci Retracement level after pulling back from last week's highs. This stock could begin to get more buying attention from this level, especially given the overall market weakness at this point.

Daily Trading Signals

 
Daily Market Commentary
Courtesy of Nirvana Systems

Updated Monday, 7/30 for Tuesday's market.

Key DOW Levels for 7/31

UP

None

DN

Below 13,200


Bounce From Lows...

- Dow bounces just above key 13,200 support, rallies 93 points. The index proceeded to bounce from this level and eventually closed the day with a nice 93 point gain. We could see a bit more short-term strength moving forward, but longer term weakness is still likely.

- The NASDAQ and S&P each bounced from early lows to end the day nicely higher. Look for more range-type movement within the current consolidations until a breakout occurs.

Summary

The Dow ended the day with a nice gain and continues to hold above critical support. However, the index will likely trade sideways-to-up until the larger H&S pattern is ready to deliver.

Read More...

Monday, July 30, 2007

 
Technical Indicators

Market Facilitation Index

Market Facilitation Index synthesizes both price and volume data in an effort to improve trading accuracy. In his book Trading Chaos, Williams identified four types of trading sessions: Fakes, Fades, Squats, and Greens.

The combination of lowered volume with a rising MFI is known as a "Fake." As there is no real foundation for change behind a stock except for market activity on the floor, the price eventually reverses itself.

A "Fade" is when volume is down and the MFI is also down. In essence, the market is bored and interest in the stock fades. Expect the price to move in the opposite direction.

When volume is up while the MFI is down, the condition is referred to as a "Squat." Think of the stock crouching down like a sprinter before a race. Movement after the squat gives a clue to future to direction.

When volume and the MFI are both up, the situation is "Green." This is a strong signal to follow the trendline...

Read More...

 
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




AMGN is winding up at lows within the boundaries of a narrowing consolidation. A breakout from this range could spark a steady move in the direction of the break. Watch 58.00 up, and 54.00 down for direction.

Daily Trading Signals

 
NYSE Chart of the Day
Courtesy of Nirvana Systems




MCD has broken a clear consolidation to the downside at 50.00 and looks to be headed much lower. Look for more selling pressure beneath the bottom of this pattern.

Daily Trading Signals

 
Daily Market Commentary
Courtesy of Nirvana Systems

Updated Friday, 7/27 for Monday's market.

Key DOW Levels for 7/30

UP

None

DN

Below 13,200


Continued Weakness...

- Dow continues lower, reaches critical support. The index closed the day with another big loss of 208 points and is now holding at critical support, which we will watch closely next week.

- The NASDAQ and S&P each sold off late in the session and continue to trend steadily lower. Look for potential continuation patterns to build out at lows before another big move occurs.

Summary

The Dow closed the day at the lows of the session with another big decline and is now holding at the neck line of a highly bearish H&S pattern. Look for a potential bounce early next week, but for overall weakness to remain intact.

Read More...

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