Freddie Mac (FRE), chartered by Congress to increase the supply of money that mortgage lenders can make available to homebuyers, recently suffered an astounding price decline and horrific downtrend that culminated in a potential exhaustion gap which has now been virtually eradicated. The stock represents a unique company that is at the center of the…
What would be the ideal picture of a technical downtrend? A few names come to mind but let’s examine Pulte Homes (PHM): I have annotated the Daily Chart of Pulte Homes (PHM). Let’s define a downtrend using the simplest two definitions possible: A series of lower lows and lower highs The 20 period moving average…
It’s time to expand our horizons beyond the stock market to other inter-related markets and also glean insights from the sector rotation model. All charts are courtesy StockCharts.com, and we will be examining the “Intermarket Relationships” profile of the last 200 days first: I have highlighted the clear negative correlation (inverse relationship) between commodities (blue…
As mentioned previously, the classic technical analysis pattern of the “Broadening Formation” has formed on the Dow Jones Index, which has historically bearish implications. Before we look at the charts, let’s define “Broadening Formation:” Quote From Investopedia: “A pattern used in technical analysis to predict the likelihood of a reversal in the direction of the…
This week saw a precarious shift in the direction of the major US Indexes due to comments by Federal Reserve Officials who still have power to affect price swings in markets. The bulls scored a major victory but still have work to do to overcome the daily downtrend on most Indexes. Let’s look: The Daily…
If yesterday was an ideal intraday trading environment, today was a relative nightmare. Such is the nature of the market to alternate between good periods and bad periods, trend and consolidation, favorable environments to unfavorable. We recognize that the market adheres to the “Law of Alternation” in various aspects, and we can expect consolidation and…
Dr. Steenbarger at the TraderFeed blogspot recently posted his observations on “Questionable Things I Hear from Traders,” and he detailed each of these concepts. I wanted to highlight his entry, and call attention to a few of the points and make you potentially self-aware in your own trading experiences. He advises against perfectionism, something with…
Yesterday’s price action exhibited textbook characteristics of a ‘trend day,’ and analyzing the action can help you spot the conditions that lead to a trend day earlier and trade more effectively as a result. First, let’s discuss what a trend day is and how we might detect it early. We define a trend day as…
Today’s price action in the major US Indexes can only be described as “wild.” The day began with an upside gap, continued with a failed gap-fill attempt, experienced rallies to new (intraday) highs, and then a massive selloff which gave way to a massive rally into the close. Traders were left with their heads spinning unless…
Dr. Bruce Hong at TraderPsychology posted an excellent series regarding the crucial factor of Writing a Trading Plan and I wanted to call attention to this extremely helpful series of posts. I’ve heard it said that a vast majority of market participants do not have a written trading plan that they developed themselves, and that…