1:45:13 AM EDT |
Highly Predictive Chart Patterns
Chart patterns that predict future outcomes like support and resistances, trend reversals and future price targets range in 'reliability' partially based on the time frame examined.
1:17:48 AM EDT |
Measuring Potential Downside Objectives
Sooner or later all markets, even in seemingly never-ending bull moves, will correct. Pullbacks can be predicted but downside targets are not always easy to calculate.
9:36:20 PM EDT |
Measuring 'Resistance' Without a Reference to Prior Highs
When there's no prior high or high Close to compare to, there are still ways to estimate possible technical resistance.
10:35:14 PM EDT |
Rectangle Pattern 'Breakouts'
If just one of the major indexes traces out a pattern that results in a measurable technical/chart trend objective, this is an Index to key on. The Dow 30 recently broke out above a multimonth rectangle pattern that suggests a 'minimum' next upside objective.
11:26:34 PM EDT |
Tops Are Hard to 'Time' But Signs Occur
Market tops in super strong bull moves are hard to get 'right' in terms of timing either profit taking on bullish plays or counter-trend trade timing. But, we can look to prior tops, trendlines and key reversals for clues.
8:09:47 PM EDT |
Assessment of a Key Bottom Versus a Temporary Low
Technically, yesterday's low was certainly a tradable bottom, especially suggested by the Dow's double bottom. However, the leading Nasdaq has some long-term chart/technical aspects that cause me to question how long the major bull market goes on.
10:08:53 PM EDT |
Major Tops That Formed in the Sept-Oct Timeframe
There are scary projections out there about how a Government debt default might tank the U.S. and World Economy. When you couple this with current long-term overbought extremes, the monthly charts suggest a possible 'set up' for a big decline.
9:33:45 PM EDT |
The Dow Current Dow Jones 'Multiplier'
The most widely reported Market 'index', the Dow 30, is not what we think of as a stock index at all, as INDU's component stocks are not capitalization weighted like the S&P 500 and Nasdaq Composite. A $1 change in a $25 Dow stock is equal to a $1 change in a $200 dollar stock, regardless of relative company size.
9:07:10 PM EDT |
Dow as a Market 'bellwether'; Price Action versus Indicators
The Dow 30, now with 3 new additions, continues to be an overall Market Bellwether more often than not. Price chart patterns in making trading decisions prevail over Indicators most times.
8:39:19 PM EDT |
Dow 30 (INDU) Still A Key Market 'Bellwether'
The Dow fell below its 10-month old up trendline recently and I discounted that as the S&P didn't follow suit. Today's bear rout suggests that INDU is the still-reigning champion Market bellwether even though comprising only 30 stocks.
9:00:46 PM EDT |
Assessing Bottom Possibilities
Looking for a bottom at this juncture technically involves support trendlines that 'held' (or didn't), assessing how much of a prior advance has been retraced and major indexes having hit oversold extremes.
7:02:51 PM EDT |
Head & Shoulder's Pattern: Accurate for Tops
Head & Shoulder's Top patterns tend to be accurate enough in predicting tops that many traders initiate bearish plays as soon as a Right Shoulder forms, without waiting for a 'confirming' neckline break.
10:13:35 PM EDT |
Sideways Trade After a Long Run Up Usually Bullish
After a strong advance such as seen since late-June, a sideways trading range most often resolves itself with a breakout to the upside. Giving the benefit of the doubt to the dominant trend.
9:36:15 PM EDT |
Knowing When a Correction is Over
A correction sometimes is over after a second down leg is only EQUAL to the first, showing no increase in selling pressure. Sometimes 'confirmation' of correction-over is the S&P climbs back into its uptrend price channel, resuming its prior rate of advance price wise.
9:40:33 PM EDT |
Fulfilling a 'Measured Move' Objective
Sometimes in the major stock indexes two declines of equal measure spell an end to a correction. This is a so-called measured move.
8:27:45 PM EDT |
Key Trendlines Confirm Support But Not New Highs
The S&P 500 fell to 1600 at its up trendline and rallied strongly but not to above its 21-day average; a second fall and bounce from the same trendline 'confirms' support. How soon new highs is the next question/guess.
9:03:53 PM EDT |
Picking Downside Targets and Strong Rebounds Confirm Reversals
My 1600 downside objective in SPX was followed by a robust rebound. When technical analysis 'works' in seeing unfolding patterns it can work superbly.
9:45:26 PM EDT |
Where to Next; How Deep a Correction, Part 2
I wrote at the beginning of the week that the recent S&P peak at 1687 would likely mark the start of a significant correction. It's often hard to believe a top will EVER form in very strong bull moves.
6:21:01 PM EDT |
Where to Next; How Deep a Correction?
There is no technical 'breakdown' yet in the market in that the uptrend remains intact to date. Still, more downside ahead is suggested by past top patterns that match the recent correction involving price and indicator action.
9:30:41 PM EDT |
Exchange Traded Funds (ETFs), Part 2: Best Uses
I wrote last week on some risks or pitfalls of some types of ETFs. This week I will explore potential advantages in using them.
9:57:47 PM EDT |
Exchange Traded Funds (ETFs), Part 1: Background & Risks
There are pitfalls in Exchange Traded Funds (ETFs), some more than others. After this article on some key risks involved in ETF's, part 2 next week describes some of the possible best uses of them.
9:58:51 PM EDT |
Tagging A Top
A trade strategy question involves projecting where the next top or bottom might come in. Price channels still are 'working' reasonably well for that purpose.
4:39:23 PM EDT |
Pattern Recognition and Projected Outcomes; Pt.2
Another chart pattern with high predictability as to the eventual outcome implied by its formation is the rectangle.
10:09:25 PM EDT |
Pattern Recognition and Projected Outcomes
With certain chart formations, such as the so-called wedge or rectangle patterns, certain upside or downside price targets can be projected. These should not be taken as minimum estimates only.
11:29:17 PM EDT |
'Best Use' of Technical Indicators; part 1
Use of technical indicators like the Parabolic study or the MACD indicator can lead to frustration (and losses!) when they are used 'mechanically'; e.g., to 'automatically' adopt bullish or bearish positions when one MACD line crosses above or below the other.
8:32:53 PM EDT |
Industrials 'Confirms' Prior Dow Transports Closing Monthly High
End February brings the Dow (Industrials) above its prior monthly closing high (13930), matching Dow Transports monthly peaks. Dow Theory suggest this is an 'all clear' for a continued major bull market.
11:53:42 PM EDT |
Technical Trading Tips: RSI Peaks and Subsequent Pullbacks
High extremes in overbought indicators like the 13-day RSI
mostly identifies that the Market is at risk of a pullback and quite substantial ones often follow within a period of days, sometimes stretching out to a few weeks. But the downside corrections do come.
10:12:57 PM EDT |
Technical Trading Tips: Assessing Slowing (trend) Momentum
I noted in my last Index Wrap (2/16) of seeing slowing upside momentum. There are various technical ways of measuring such a slowing and the associated potential for a correction.
10:10:42 PM EDT |
FLAG Pattern 'Predictions'; More on Dow Theory
So-called bull and bear 'flag' patterns are often predictive for the next up or down swing. The 'magic' number for Thursday 1/31/13 is 13900 in the Dow 30 (INDU) as such a monthly Close (or higher) would be a final Dow Theory confirmation of a primary Bull Market.
8:56:13 PM EDT |
Dow Theory: for the BIG Picture
Dow Theory doesn't usually have week to week relevance for options traders but it is of interest in terms of verifying the major trend, especially at key junctures.