Archive for April, 2011

Market Turning Points | Andre Gratian | 2011-04-24

Posted in education, technical analysis on 2011-04-24 by Strategesis

From Safehaven.com:

The SPX and QQQ have completed a short intermediate-term correction in what appears to be a reverse Head & Shoulders pattern and, after completing the right shoulder on Monday morning, the indices rocketed upward. If the pattern is confirmed as valid by future action, the traditional measurement of the break-out move calls for a minimum target of about 1425 for the SPX, and one of 62.50 for the QQQ. Since these projections pretty much coincide with the ones that I derive from the Point & Figure bases for the two indices, it increases the odds of their being valid.

Continued

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A Look the Baltic Dry Index and What It May be Telling Us

Posted in education, technical analysis on 2011-04-23 by Strategesis

From Safehaven.com:

It is my belief that the weakness seen in the Baltic Dry Index is confirming my conclusions that the rallies out of the 2009 lows are likely counter-trend bear market affairs and not a result of strong fundamental growth nor of a sustained “recovery.”

Continued

When Tim Wood speaks, you should listen.

Beyond The VIX

Posted in education, options, technical indicator on 2011-04-20 by Strategesis

From Safehaven.com:

More importantly notice the two green boxes. The first is the flash crash of 2010. Notice how the VIX makes new lows while the Skew index makes new highs. Then once the market place reacts to falling asset prices, the VIX rises while the Skew Index falls. Now look at the next green box. The same exact divergence is occurring. Last month’s selloff is even reflected.

Continued

Why it is better to occasionally play the long shot, instead of ONLY going for the highest probability play

Posted in education, trading strategy on 2011-04-19 by Strategesis

From PhysOrg.com:

“Instead of trying to make perfect decisions based on imperfect information, the cell plays the odds with an important twist: it hedges its bets,” Simpson said. “Sure, most of the cells will place bets on the likely winner, but an important few will put their money on the long shot.”

Continued

Turning Points | Andre Gratian | 2011-04-17

Posted in education, technical analysis on 2011-04-17 by Strategesis

From Safehaven.com:

There is a good possibility that the low of the correction from 1339 has now been seen. However, a number of technical factors are suggesting that a pull-back will be needed before we can move higher. We’ll examine these in our analysis, but one of them is the fact that the QQQ may have suffered a minor set-back as a result of GOOG’s weakness on Friday and may need a small period of recuperation. Should the weakness exceed more than a few points, it could alter the scenario.

Continued

Richard Wyckoff method

Posted in education, technical analysis on 2011-04-17 by Strategesis

From ReadTheTicker.com:

The originator of this method is from the writings of Richard D Wyckoff. (1873-1934)

At the age of 15-years old, he became a stock runner, scurrying back and forth on Wall Street. At age 25, he opened his own brokerage office which gave him close contact with several the most important and influential traders Wall Street has ever seen. He studied the market operations of Jay Gould, Jesse Livermore, J.P. Morgan, Andrew Carnegie, along with many others, all in an effort to develop his own approach to the market. These were men who studied the market, understood how and why it moved, and profited from it. Wyckoff methods were successfully applied in newsletter called ‘The Magazine of WallStreet’ (known to have 200,000 subscribers in the 1920’s). The newsletter became the darling of Wall Street traders.

Continued

SPX Correction Looms

Posted in education, technical analysis on 2011-04-16 by Strategesis

From Safehaven.com:

Corrections exist for one reason alone, to rebalance sentiment. Sentiment is simply how traders as a herd happen to feel about the stock markets at any given time. Sentiment swings like a giant pendulum, perpetually oscillating back and forth between its polar extremes of greed and fear. These powerful emotions are finite and self-limiting. The more extreme they grow, the more likely the pendulum is due to swing back in the opposite direction to restore balance.

The physical mechanics of pendulums aptly illustrate the psychological cycles in the stock markets. As a pendulum nears the top of its arc, its momentum gradually slows and then stops. The swing has a limit. And once it starts swinging back in the opposite direction, it accelerates. Though this kinetic energy peaks halfway through its arc, it isn’t fully bled off until the pendulum reaches the opposite extreme.

Stock-market sentiment works the same way. After an episode of extreme greed or fear, sentiment doesn’t just start swinging back and then magically stop mid-swing. Instead it gradually builds momentum that isn’t exhausted until the opposite extreme is finally reached. After episodes of extreme greed, sentiment doesn’t stabilize until we see extreme fear. And this is the main reason why an SPX correction still looms.

Continued