Yesterday’s intraday action took prices to the falling 20 day moving average, and the resulting close formed a candlestick pattern known as the “shooting star” which happened to form at this key resistance zone. What was the result? A powerful move to the downside this morning as the psychology represented by this pattern played out….
Last week, I was introduced to a new site called NewsFlashr, which was developed by the creators of the amazing Instant Bull stock market news/information website. NewsFlashr allows you to view headlines on selected topics quickly and easily, on such areas as World News, Politics (including the 2008 elections and primaries, which I follow daily),…
Let’s look at the 5-minute chart of the price action in the stock market during yesterday’s trend day: The initial gap was about a 200 Dow point ($2.00 DIA) gap, meaning odds were strongly against a full gap fade, and actually favored that a trend day was setting up. Even still, the first trade is…
Before you get ultra bullish, realize that the sharpest volatility price moves to the upside often occur during a bearish downtrend. That’s likely what happened today. The day began with a strong upside gap in all US Indexes, and proceeded to a near 50% gap fade, followed by a strong surge of buying power (combined…
I think the Market shocked a lot of people today by making such a large volatility upwards price move, both in reaction to the Fed announcing a $200 Billion stimulus package to help the credit crisis, and by shorts covering to avoid being steamrolled (combined with new longs buying in anticipation of a bottom –…
Apple (AAPL) has fallen from $200 per share to $115 in two months – a mammoth drop for such a strong, newsworthy stock. Let’s look at the charts to see what might be ahead next. Notice in early November 2007 how the large volatility price move sent shockwaves through the stock, and led to a…
Let’s start by looking at the charts of this parabolic rise of this critical commodity: Daily View: Weekly View: Monthly View: Can you remember how, less than 10 years ago, the price of one barrel of oil cost less than $15? Gas prices in the US cost less than $1.00 per gallon about that time….
Let’s peek at some of the major Indexes to see what may be the next play in the upcoming weeks: First, the Dow Jones: Notice that the Broadening Top formation (bearish) that I mentioned months ago is completing to the downside. Momentum keeps making lower lows, signaling the increased probability of lower index prices are…
The global equity return for 2008 so far is quite bleak. Let’s look at this chart to see some of the major financial markets’ rate of return since January: Global markets are correlated, and global equities are enduring a correction that is taking them near bear market territory (generally a decline of 20% or more)….
In my previous post entitled “Gambler’s Fallacy” I mentioned that you should not radically alter your position size (or trading frequency) based on the outcome of the last handful of trades. But when is it appropriate to adjust your position size? Recall that the Gambler’s Fallacy occurs based on emotions, whether positive or negative. If…