Spinning Tops are depicted with small bodies relative to the shadows. This demonstrates some indecision on the part of the bulls and the bears. They are considered neutral when trading in a sideways market. However, in a trending or oscillating market, a relatively good rule of thumb is that the next days trading will probably move in the direction of the opening price. The size of the shadow is not as important as the size of the body for forming a Spinning Top.Read More
The best time to buy fear is when there’s too much of it.
But who in their right mind can tell when there’s just too much?
Honestly, any one can.
You just have to know what you’re looking for with over-extensions on the Volatility Index (VIX) along with its upper Bollinger Band (2,20) and Williams’ %R.Read More
When Munehia Homma first created candlestick charts in they 1700s, he had no idea it’d change the way we look at stocks 300 years later.
To him, candlestick charting was meant for the rice trade.
He’d record the opening day’s price of rice, the low and the close. And over time, he’d begin to see price patterns in his recordings, mapping out repetitive signals in the price bars. He’d soon give them names, like spinning tops, dojis, and hanging man – candlestick names we still use to this day. The discovery of such patterns helped him successfully predict future direction of rice prices, giving him a significant advantage over other traders.Read More
At times, we forget to see the forest for the trees.
Even though market chaos erupted over Syria and fears of a trade war in early 2018, we often forget that markets are quite resilient, especially when the economy is still strong.
We witnessed this in early 2018.Read More
Apparently, Donald Trump and Amazon.com have some bad blood.
However, don’t let it scare you away from buying the stock. Instead, on Trump-tweeting induced weakness, it’s actually a solid opportunity.
In late February 2017, the President tweeted his concerns that Amazon does not pay enough taxes and its pays too little to the U.S. Postal Service to deliver. The President also argued that Amazon’s current tax deal “is closing stores all over the country.”Read More
Traders are often told to buy excessive fear or greed.
Unfortunately, many aren’t aware of when to actually pull the trigger, or realize when fear or greed have gotten way out of control.
But there’s a simple way to know exactly when to buy and when to sell.Read More
Volatility has been severe in 2018.
After watching the Dow Jones Industrials explode from 24,809 to a high of 26,616, the bottom appeared to fall out starting February 2, 2018, as the Dow fell 665 points.
The Dow would fall another 1,175 points on February 5, and another 1,032 points on February 8, 2018. On March 1, 2018, the Dow would fall another 420 points.Read More
One of the best ways to make money on the Street is by spotting excessive bouts of fear and greed.
In fact, that’s how some of the most famous investors made their money.
In short, they were buying when others were scared, and selling when others got too greedy. They were exploiting the very psychology of herd mentality.
And we can do much of the same.Read More
All of a sudden, there’s a gap in the chart of your favorite stock.
Surprise news, earnings, something unexpected caused a bout of extreme optimism or pessimism that resulted in the move.
Look at Palo Alto Networks (PANW), for example. In early June 2017, shares closed at $118.59. However, shortly after the close, news of a massive cyber attack began hitting headlines. Orders come flooding in overnight. The next day, the stock opens at $140.Read More
It’s always interesting listening to fundamental and technical analysts argue.
Just as fundamental investors like to laugh at technical analysis, technicians laugh at the absurdity of investing just on fundamentals. It’s a never-ending, laughable fight.
Fundamental analysis shows us what’s under the hood, and whether or not an asset is over- or underpriced, as compared to the competition. In fact, Warren Buffett, Baron Rothschild and Sir John Templeton subscribed to this school of thought and made a fortune. They seeks to uncover the intrinsic or true value of an asset, and is dependent on future sales, earnings, and estimates. It’s pain-staking research at times.Read More
No one ever said technical analysis was easy.
But over time, with practice, the easier it becomes.
For months, we’ve introduced you to several technical tools. However, the one we get the most questions about are Fibonacci retracements. To many, this took is considered complex and outdated. But to be very honest, it’s not complex at all once you practice with it.
When it comes to trading, one of the best ways to tell how strong or weak a stock may be is by paying attention to the Money Flow Index (MFI).
In its simplest terms, money flow is another momentum indicator that indicates strength of money flowing in and out of a stock. If the flow of money into the stock is weak, we’ll begin to see MFI trend down. But as money flows into a stock, we can see this happening when MFI trends up.
It’s also essential in determining overbought and oversold conditions.Read More
When it comes to technical analysis, one of the necessities for success is the moving average. In fact, for years, I’ve personally relied on two of them – the 50-day and even the 200-day moving averages.
Each is powerful because they give us a view of a stock’s trend, as well as a look at where we may find support and resistance along the way. For example, if I find a stock that historically bounces every time it hits its 50-day moving average, I’m likely to buy on a test of that moving average.
That’s because, as they say, the trend is your friend.Read More
echnical analysis has always been rejected as a study of lines and charts without any real concrete or profitable results. And clearly, an exhaustive debate on its usefulness would be long-winded, especially against those that only subscribe to fundamental analysis, as Warren Buffett does.
But as any technician will tell you, it does work well with understanding.Read More
We’re often told that technical analysis is a waste of time.
Traders are often told to ignore it altogether.
“Technical analysis is fundamentally flawed,” says Forbes.
“Technical analysis is stupid,” blared The Motley Fool.
But it’s just not true. In fact, technical analysis is just as important as fundamental analysis.Read More
No one was ever born a successful trader, but we all have the potential to become one.
The other week, we discussed the key reason why so many traders fail because they get caught up in doing what every one else is doing.
However, even if you’re successful at doing just that, there are other key elements of a trade, including planning out the trade and executing it properly. Unfortunately, all too often, we trade without a plan, without a safety net. And that’s the best way to lose money. Here are top five questions you should always ask yourself prior to a trade.