Are you looking at a trade or position only as it relates to a specific stock and getting a "mixed feeling" and can't really get a handle on what the stock's chart is telling you? If so, you might be looking at the trade through a monocular. You know, the type of vision enhancing device that you would hold up to only one eye?
Some "hunters" prefer the binocular when seeking out food. The vision enhancing device you hold up to both eyes. Some hunters prefer the binocular as it gives them a larger field of vision and more of a 3-dimensional view of their surroundings.
In today's market monitor, we've been discussion shares of OSI Systems (NASDAQ:OSIS) $17.52 -5.29% and trying to determine if bears should close out positions recently profiled.
OSI Systems Chart - $1 and $0.50 box
Yesterday's trade at $18.50 was enough to get the OSIS p/f chart back on a "buy signal." However, one of the things bears in OSIS liked from the profiled trade, was the OVERHEAD supply from $18.50-$21, that might just "keep things in check" on a rally attempt. Bears are seeing some of that overhead supply perhaps come into play today, allowing for bears to cover if short at $18.00, or keep pair down from a full position short. Remember, this trade was profiled with some of the bullish % charts were more "oversold" and risk was at higher levels for bearish trades. Maybe a good lesson today on how overhead supply can help a bear and give him some time to think things through.
Another stock that investors might be monitoring also in the "protection/safety equipment" group is a recently profiled bearish play at premierinvestor.net in Invision Technologies (NASDAQ:INVN) $25.89 -5.48%. A trader monitoring both OSIS and INVN sees some very similar type of comparisons perhaps.
Invision Technologies Chart - $1 & $0.50 box
Subscriber at premierinvestor.net may have taken the recently profiled bearish trade in InVision Tech. (INVN) as the stock rallies to a potential level of resistance. This is more of a "risk/reward" trade where a clear stop at $29 might be identified and a pullback to the $22-$25 zone is possible. If the stock were to generate a sell signal at $21, then the bearish count would turn back negative again.
In today's 11:00 Update at OptionInvestor.com, we talked about "like stocks" UnitedHealth (NYSE:UNH) $93.30 +0.86% and Oxford Health (NYSE:OHP) $44.71 +4.46% as they are both in the same "HMO group." Same type of thing with OSIS and INVN in the protection/safety group where traders can monitor both in unison to get a feel for things.
When trading any stock, try and identify the sector bellwethers and assess their technical strength. Do the same with other "like" stocks in corresponding sectors/groups and don't get caught with "tunnel vision" by looking at just one stock you're trading. Try and find out what other market participants are doing in other stocks.
It has been noted that roughly 70% of a stock's price action is attributed to SECTOR performance. As such, observe what other stocks in the sector are doing and monitor bullish/bearish vertical counts and the sector bullish % as well as the broader market bullish % charts to assess "market/sector" risk.
Dorsey/Wright and Associates has done a lot of work to build broader sector bullish % charts. You can get a free two-week trial of their charting system at www.dorseywright.com.
For those interested in reading and learning more about point/figure charts, we have educational articles in the "Bailey's Basics" section of the site. There are also some good educational articles at www.stockcharts.com in their p/f area.