Caterpillar: Caterpillar (CAT) recently pulled back (sharply, might I add) to the rising 20 moving average and found (temporary) support. It’s still on a down day (currently) with a nasty gap, but aggressive trend traders (and swing traders) could have (or still can) establish a position here with a tight stop should the average be…
A reader informed me I failed to include the Dow chart in the recent chart analysis so here is today’ s Dow Jones action – the Dow has held up the strongest in the recent environment, perhaps because of capital flowing into larger capitalized securities. The Russell (small cap) is still showing relative weakness. We…
Dr. Bruce Hong recently published his blog on Trading Psychology with the perspective of biological psychology and academic research/information. I am thoroughly impressed with his posts so far (they are very detailed and informative to all levels of readers) and I highly recommend reading and following his posts. The site is simply entitled TraderPsychology and…
The Russell 2000 suffered the worst technical damage today (in terms of support/resistance), while the Nasdaq isn’t far behind. The S&P and Dow are still looking comfortable, yet a test of the rising 20 period moving average isn’t far away. For the Nasdaq, a test of the 50 MA would mean shedding 25 more points…
Here are the most recent index charts for May 14: Dow Jones Nasdaq S&P 500 Russell: In almost all indexes, price bounced off (found support at) the rising 20 period moving average. All indexes are making divergences with price, in that momentum is decreasing while price increases which signals caution. The Stochastic indicator has pulled…
Attached is the weekly chart of the Dow Jones: Â Momentum is confirming new price highs (but this is NOT the case on the Nasdaq) Price is clearly overextended in terms of oscillators (yet this isn’t a reason to reverse) Price is above the upper Bollinger Band (again, no reason to reverse) My observations:Â We are…
There was some damage done to the weekly trend on most of the Indexes this week. The Nasdaq clearly broke its rising trend (some have called this a rising wedge) and could serve as temporary resistance until broken (or resumed). The 20 period moving average acted as support, and may continue to do so until…
The Nasdaq fell 1.7% and the Dow fell 1.1%. Not only is this by no means surprising, it is also not a huge decline given the rally we have experienced. There is irony I discovered at least in the Nasdaq. Tuesday and Wednesday, the Nasdaq gapped lower, signaling a possible trend down day. Instead, price…
Teresa Lo posted recently regarding insights from Mark Douglas, one of many traders’ favorite authors. In it, she discusses fear, biological responses, pain, edge, seven principles for consistency/success, and other insights. I have attached two key points: I recently finished reading The Disciplined Trader (Mark Douglas) and was completely impressed, especially with its constant handling…
Dr. Steenbarger recently discussed five major differences between professional traders and novices based on his experience in working with professional traders. Here are a few highlights: Pro traders think about the big picture – they monitor intercorrelated markets and observe relationships between them (and trade them!). Pro traders also think ‘small,’ in terms of returns….