As per reader request, I conducted a quick summary of all gaps in the DIA (Dow Jones ETF) for the month of January to see what would have happened if a trader faded all gaps. The question is the following: How many days in January had overnight gaps in the DIA (Dow Jones index), and…
Let’s look at the idealized trades for the final day of January, 2008. As our proxy, let’s use the DIA (Dow Jones ETF): The first trade is to FADE the gap (buy long and play for a target of yesterday’s close). This trade worked out perfectly. The second trade impulse is to trade IN the…
Not to be cynical, but I’m beginning to be able to fade the gaps each morning in my sleep. If I dream about a gap, it fills. This most basic and simple strategy is paying out more than any complex strategy right now. It happened again today, almost with a yawn: Feel free to search…
I thought I’d show yesterday’s intraday price action as an educational reminder than anything can happen in the market, but signals usually precede calamaties. From the perspective of the DIA, Dow Jones ETF on the 5-minute chart: First, note the Momentum Divergence (1). Price makes a significant new high, while the momentum oscillator fails to…
In his book Technical Analysis and Stock Market Profits, Richard Schabacker – also known as “The Father of Technical Analysis†– wrote parting comments to naturally conservative or risk averse investors that I wanted to share. Keep in mind, these words were written in the 1920s. He states that most market students need words of…
Agreed, it may be pointless to study the technical (chart) picture of the current indexes right before the Federal Reserve meets, because their decision will determine how the market breaks out of its current precarious position, which actually is at an interesting juncture. How so? There was a bullish rejection of lows about the 11,600…
Reuters today brought up an interesting question:Â Could the new president who takes over in 2009 ‘fire’ Ben Bernanke due to missteps as chairman of the Federal Reserve when his term expires in 2010? In today’s post entitled “Weak Growth, Miscues Put Bernake’s Job at Risk,” Mark Felsenthal and Tamawa Kadoya muse as to reasons…
Apple Inc (AAPL) has been a darling, dream stock for 2007, appreciating from roughly $80 per share to a peak of $200… before plummeting precipitously recently to start off 2008. Let’s take a look at the widely unexpected carnage Apple investors have had to endure recently: Let me explain all the annotations I have made….
Readers know how much I enjoy gap fade trades. This morning was no exception, though it was nowhere near the magnitude of last week’s gap fades. Let’s check it out: I’m utilizing the one-minute chart (not recommended for trading) to illustrate the point, because the 5-minute chart is too narrow to illustrate. Gap fades are…
Rudy at the Ticker Tape Trader recently posted a variety of rules from famous trader Richard Donchian, famous for his Donchian Channels trading system made famous by the Turtle Traders. While I suggest you look at all the sample of guidelines, I thought I would highlight a few of them here: “From a period of…