General Comments
[dc]O[/dc]ne of the advantages of using properly calibrated bands is that they can show when markets reach emotional price extremes. It should be rather unusual for a market to go from being outside one side of the band to the other, as happened on this 5 minute
General Comments
[dc]I[/dc] receive a lot of notes and messages from people who are struggling to learn to trade. One of the common threads is that many of them are discretionary traders, and they find that their decisions, made in the heat of battle, often result in the worst possible
General Comments
Traditionally, the spread of Consumer Discretionary stocks over Consumer Staples stocks has been taken to be a gauge of market sentiment—a clear expression of a cyclical sector compared to a defensive sector. Note that this is a coincident indicator, meaning that is has not led the market at major
The Book
[dc]I[/dc] wanted to take a few minutes today to share some thoughts about my book, The Art & Science of Technical Analysis , which is now available for purchase on Amazon.com and in bookstores. I think this book is a valuable contribution to the trading literature, as it
General Comments
Longer-term patterns in the EURUSD are strongly supportive of a bearish trade, perhaps targeting parity or lower. This is an aggressive entry, but it is often possible to enter after a very small consolidation near recent lows. In this case, stops could be established somewhere in the neighborhood of 1.
Anti
Note the weekly bear flag on the S&P 500 index. You may call it by a number of different names (wedge, pullback, anti, flag, etc.), but the concept is the same: A period of contracting volatility with an upward bias following a sharp selloff. This pattern could be
General Comments
[dc]T[/dc]his, my first reader question, comes from John in Seattle: I often see and hear people talking about good risk management being a good part of trading. What does this mean exactly? Limiting the size of your losses? Something else? Thank you. John is right. I have
Breakout
Watch DFS in a breakout above resistance (roughly 34.45 – 34.75.) Resistance levels are usually not clear lines, but rather rough "zones" where selling pressure has previously been able to overcome buying pressure. Multiple tests of a level can often set up a good run above resistance,
Individual Traders
[dc]O[/dc]ne of the challenges facing stock traders is knowing where to focus your attention. In a universe of roughly 7,000 names, with maybe 2,000 of those traded actively, how do you know you are finding the best opportunities? Too often, people focus on what is
General Comments
[dc]J[/dc]ust an open invitation here to my readers: If you have topics for discussion, ideas for posts or series of posts, questions on the book, questions on the market or trading in general, please ask. You may either ask in the comments here or email (adamhgrimes at
Support / Resistance
Fourth principle: Price Action Around Support / Resistance continued from this post... and if you are just starting, go here and read the posts in order (from the bottom up.) I think they will make much more sense that way. [dc]T[/dc]he last two installments in this series have
Breakout
A few lessons here from the daily continuous chart of Corn futures (it's worthwhile looking at the Sept contact along and considering the difference in patterns the roll creates, but that's another story): * The continuous contract has defined a clear range. The potential resistance area (always