News FeedCharting 101
The Time Periods of a Trading Day
The following are very important shifts in trading throughout the day. Although this outline is geared for the day trader, longer term investors may be able to place orders at optimal times and get a better sense of market consistencies.
9:30 a.m. eastern time – market opens
9:50-10:10 – first reversal period
10:25 – milder reversal
11:20 – market tends to retreat, investors head out to lunch
1:30 p.m. – post-lunchtime market begins to improve and some stocks start to move
2:30 – stocks break out (or down) with more conviction
3:00 – Treasury bonds stop trading, possible market reversal
3:30 – mild reversal possible
4:00 p.m. eastern time…
Volume Volume Volume Part II
In another example, a two to three day climb occurs with a star doji forming at the peak. This indecision coupled with low volume is a good indication that the price will come tumbling down.
Another tip to consider are huge volume spikes, whether in a downtrend or uptrend, can prove to slow down or completely halt the current trend.
Volume Volume Volume Part I
Volume is one of the ultimate indicators. Volume can be associated with the amount of emotion that goes into a direction that the stock takes. If a stock has high volume on either a positive or negative move, chances are that direction will continue because investors have strong emotion towards that particular direction. However, if a stock makes a move in either direction will low volume we would believe that movement in that direction is only temporary and viewed upon as a weak move.
In this graph we notice that when the stock started to top off and begin to pull…
23Jul2006 | Stephen Oakes | 0 comments | ContinuedTrend Lines Part II
In a typical downtrend we see that the stock has broken through its support and begins a trend characterized by lower lows and lower highs. Note that when the stock will break this trend by making a higher high and a higher low.
Trend lines help us to get a general overview of how healthy the stock is technically. These lines help buyers find dips and excellent buying opportunities. On the flip side, once a downtrend begins to emerge, shorting (selling first, then buying to cover position) may be the best strategy for short term traders.
Do not base your trades on…
23Jul2006 | Stephen Oakes | 0 comments | ContinuedTrend Lines Part I
Drawing trend lines is a skill that will help determine the true aim of a stock in the long run. From trend lines we can tell if the stock is taking a temporary dip, telling us it’s time to buy. On the other hand, if the stock is overextended and surging too far above its trend line, it’s a safe bet that you should pull your profits out because sooner or later the stock will begin to gravitate back to its trend line. The major or “primary” trend line is the line that is a long term one. Often, a…
22Jul2006 | Stephen Oakes | 0 comments | ContinuedCandlesticks 101
Candlestick charting techniques were introduced by a world renowned seventeenth-century Japanese rice broker, Munehisa Homma. This man was among the first of his kind to look at price history and then use this information to predict future prices. It is said that Homma made 100 consecutive profitable trades. Since the invasion of this powerful trading tool, many investors have turned to candlestick charting to begin to understand a stock’s past and future movements a little better. Here are some examples of how a candlestick stem might look.
Candlesticks can symbolize minutes, days, and weeks, etc. This depends on the time frame…
22Jul2006 | Stephen Oakes | 0 comments | ContinuedSupport and Resistance Levels
Understanding support and resistance levels is very simple. A stock will trade in a range, fluctuating up and down until it finally makes a definitive move up or down. When a stock rises and then suddenly hits an imaginary price ceiling, we call that price ceiling a resistance.
Resistance is a term people associate with “holding back,” because that is the basic principle of what is happening to the stock. It is being held back from making more gains. Now, if you can imagine a ball that bounces off the ground and propels itself higher. The ground acts as a support…
22Jul2006 | Stephen Oakes | 0 comments | ContinuedThe Business Cycle
Over time you will be able to look at a chart of a stock and recognize what part of the business cycle it currently is. The business cycle is divided up into four parts or stages. During stage one; stocks should be monitored to make sure that the stock does not go any lower. The types of stocks to look for are ones that have been basing anywhere from four to six weeks. When these stocks are appear to be breaking out of this stage, forming a bullish trend along with our other indicators, we jump in and buy it!
It…
22Jul2006 | Stephen Oakes | 0 comments | ContinuedWhat is TA all about?
Technical Analysis is the study of historical stock price data in the form of trends, volume, indicators, etc. One uses TA in trying to predict future movement. In many cases, patterns are formed which often tell stories about recent price movement and where future prices are likely to do. Click here to read a quick introduction to what technical analysis is all about.
Many people use candlestick charting when viewing stock charts. For example, if you go to Bigcharts and click on interactive charting, you will be taken to a page where you can alter how you view your stock, what time frame…
21Jul2006 | Stephen Oakes | 0 comments | Continued
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