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….
“Make hay while the sun still shines” or so the saying goes. It’s not often we see such strength in the market, especially with dark clouds on the economic front upon us. Maybe that’s exactly why we see market strength, from a contrarian perspective. The Dow Jones Industrial Average has risen 24 out of the…
Readers, I know I discuss momentum divergences very frequently but they work (are effective) on so many levels. Primarily, they set up trade ideas, and I take many of my swing trades based on momentum divergences. They work better than average for day-trading but not as well as swing trades off daily charts (in my…