Friday in the stock market gave us an almost ideal example of the classic rolling momentum divergence and balanced shift in demand from sellers to buyers. Let’s view the pattern: This is the DIA 5-minute chart. Notice the higher lows that continuously form in the momentum oscillator as price makes new intraday lows. Eventually, the…
Adam Hewison of INO.com recently published an educational and informational video entitled Fibonacci Retracement Rule on trading price pullbacks with low risk through simple use of the Fibonacci Retracement tool. In the brief video, he shares his trading experiences on how he uses Fibonacci techniques and how he sets up trades in trends with reduced…
The S&P 500 and Dow Jones Indexes are forming a small triangle consolidation pattern, meaning prices are consolidating to a possible apex which may break soon. Let’s check it out (daily): Onto the NASDAQ: The red trend-lines represent the relatively symmetrical triangle on the daily chart (and momentum beneath). Most triangles break 75% of the…
Surprisingly, the market punished traders with a trend day down following yesterday’s trend day up. Usually, we expect some sort of consolidation after a major trend day, rather than a trend day in the opposite direction, which confuses swing traders to no end. Intraday traders often fare better, because many swing trading systems trigger buy…
Research in Motion (RIMM), famous for the Blackberry and volatile stock prices, has shown investors more than a roller-coaster ride, and also has shown more volatility than most investors can stomach. Let’s look at the harried daily chart: I have tried to highlight just some of the larger gaps (purple ovals) in the stock. Sometimes…
The intraday action in the major US indexes was a gift in the form of a ‘trend day up’ structure, which occurs rarely, but offers us significant opportunities for profits. Let’s peek: Notice how the market (DIA ETF – 5-minute chart) gapped up, representing an initial momentum imbalance. A gap can serve as the first…
The Consumer Discretionary Sector is important to study for the broader implications for the economy and stock market. When the consumers spend, it is generally good for the economy and when they don’t (or hold back purchases), it’s not. Let’s look at the chart for the XLY, Consumer Discretionary Sector SPDR ETF (weekly): Notice the…
The last two days in the major market ETFs have shown gap opportunities, though the gaps have (yet) to close on both occasions. Also, interesting momentum impulses have developed which warrant an educational lesson. Let’s see: DIA (Dow Jones ETF) 5-minute chart: First, notice the purple ovals, which represent overnight gaps. While January was a…
The Financial Sector has experienced a bit of rampant volatility since 2008 began. Let’s look at two ten-day periods and see the absolute returns and how they differ for that period for the XLF sector ETF. Everything was rosy as could be from January 17th until January 30th, 2008: The Financial Sector (red bar on…
As I mentioned in last night’s post, I saw some bullishness underlying the market from the fact that the sellers were unable to take prices lower than 12,500 three times in the last week. Also, the classic bear flag which formed wasn’t resolving with any satisfaction, meaning that the pressure was building behind the scenes…