Dec 1, 2014: 12:53 PM CST
And now for something completely expected – after multiple days in a row to the upside with persistent negative divergences, stocks pulled back from their overextended conditions.
However, how far may stock prices fall and what levels are both potential downside targets and possible buy levels?
Let’s update our charts and plan accordingly:
Markets tend to “wave,” or trade in a trend higher then retrace part of the movement (trade lower) before trading higher again.
It’s relatively rare to get sustained, one-directional price action day over day like we saw from October’s low to the end-of-November peak (so far).
Nevertheless, stock prices are logically retracing down from the recent 2,070 peak and the question is “where will they go?”
Our first target is roughly here at the rising 20 day EMA and price confluence near the 2,040 level. Continue Reading…
Nov 26, 2014: 3:44 PM CST
We can learn valuable lessons by studying classic examples of price action – in this case, a large divergence into snap-back reversal event (which stuns traders when they’re caught in the sharp sell-off).
Let’s take a quick look at a recent clear example in Keurig Green Mountain Coffee Roasters (GMCR):
The Daily Chart revealed a strong uptrend with a series of higher price highs and lows along with a bullish moving average orientation.
However, scratching the surface, we see volume and the momentum oscillator declining (making a steady series of lower highs as price continued to break to higher highs).
This is a classic negative divergence; the longer this “divergent” situation continues, the more likely price is to snap-back sharply.
Think of it like a rubber band – the further the band stretches, the more violent the snap-back when the force is released. Continue Reading…
Nov 25, 2014: 4:04 PM CST
If you’re looking to diversify your trading strategies, learn a new technique, or just are looking for a new way to liven up your trading, then join us tonight for a special webinar with my friend and colleague John Carter.
John will be presenting “My Favorite Ways to Trade Options on ETFs” which combines the option world with broader ETFs.
I’ve always been a fan of John’s presentations and am proud to count myself as an educational affiliate of his Simpler Options trainings.
Carter goes beyond directional put and call buying strategies and introduces tips and tactics specifically designed to cut your risk.
For a bit of background info before attending the webinar, you can also view his quick-tips video for an introduction to what he’ll cover tonight.
And as always, thank to John for his continued commitment to quality trader education – but in a simple, folksy style. Head on over to register for free now!
Nov 25, 2014: 3:40 PM CST
I had a question about Natural Gas this morning and found something interesting on the current chart – note the key levels and breakout opportunities that are setting up currently.
Let’s see these levels and highlight the key targets and structure moving forward:
The indicator-heavy chart above shows the trend, spike in bullish (buy) volume going into November, and the two recent sideways trading ranges.
“Value” or a key pivot point (current support) exists near the $4.200 level as price is likely moving up through the yellow highlighted region toward the prior high near $4.700.
We can zoom-in on these specific levels and build short-term trades on the pure-price charts: Continue Reading…
Nov 24, 2014: 2:04 PM CST
We continue to see “more of the same” action and the simplest play is to “go with it.” Yet so few traders actually do that it seems.
Nevertheless, let’s update our mid-day information and highlight our trending stock candidates for today’s session.
We’ll actually start with Sector Breadth which is MIXED BULLISH today:
On today’s bullish session (the NASDAQ and Russell are actually showing relative strength with big bullish moves today), our top sectors include the offensive (risk-on) Financials, Discretionary, and Technology sectors.
That’s a good sign as it suggests confidence in terms of broader money flow into the offensive/bullish segments of the market.
While not very bearish, we’re seeing strength also appear in Health Care. Continue Reading…