Posts Tagged ‘trend lines’

How a Simple Line Can Improve Your Trading Success

Elliott Wave International’s Jeffrey Kennedy explains How a Simple Line Can Improve Your Trading Success. 

The following trading lesson has been adapted from Jeffrey Kennedy’s eBook, Trading the Line – 5 Ways You Can Use Trendlines to Improve Your Trading Decisions. Now through February 7, you can download the 14-page eBook free. Learn more here.

"How to draw a trendline" is one of the first things people learn when they study technical analysis. Typically, they quickly move on to more advanced topics and too often discard this simplest of all technical tools.

Yet you’d be amazed at the value a simple line can offer when you analyze a market. As Jeffrey Kennedy, Elliott Wave International’s Chief Commodity Analyst, puts it:

“A trendline represents the psychology of the market, specifically, the psychology between the bulls and the bears. If the trendline slopes upward, the bulls are in control. If the trendline slopes downward, the bears are in control. Moreover, the actual angle or slope of a trendline can determine whether or not the market is extremely optimistic or extremely pessimistic.”

In other words, a trendline can help you identify the market’s trend. Consider this example in the price chart of Google.


 
That one trendline — drawn between the lows in 2004 and the lows in 2005 — provided support for a number of retracements over the next two years.

That’s pretty basic. But there are many more ways to draw trendlines. When a market is in a correction, you can draw a trendline and then draw a parallel line: in turn, these two parallel lines can create a channel that often "contains" the corrective price action. When price breaks out of this channel, there’s a good chance the correction is over and the main trend has resumed. Here’s an example in a chart of Soybeans. Notice how the upper trendline provided support for the subsequent move.

For more free trading lessons on trendlines, download Jeffrey Kennedy’s free 14-page eBook, Trading the Line – 5 Ways You Can Use Trendlines to Improve Your Trading Decisions. It explains the power of simple trendlines, how to draw them, and how to determine when the trend has actually changed. Download your free eBook.

 

This article was syndicated by Elliott Wave International and was originally published under the headline How a
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DARK HORSE HEDGE 7/11/10

DARK HORSE HEDGE 7/11/10

Steeplechase

By Scott Brown of Sabrient, with Ilene of Phil’s Stock World 

A holiday-shortened week combined with little news provided the backdrop for a light volume positive week with the major indexes posting 5% gains.  Earnings season begins Monday July 12, starting off with Alcoa Inc. and followed by dozens of other companies.  The S&P is bumping up against several technical resistance lines.  After falling over 13% since the April highs, last week’s recovery pushed the SPX to 1077. 

On the chart below, our trend line drawn through the April highs and June rebound-highs indicates that the SPX is right at trend-line resistance.  The 50-day Moving Average also looms just above as another possible resistance area. 

[Chart by Free Stock Charts]

The 14-day RSI at 42.4 remains below a more bullish 50, and the 12-26-9 MACD at -13.6 remains shy of a bullish signal line at zero.  Factoring in the lack of volume in last week’s 5% rebound (and possible lack of conviction), the chart-evidence leads us to believe that the market isn’t ready to continue the uptrend in the short-term.  Notice all four positive days last week had volume below the 50-day Moving Average. Greater declining volume on Thursday and Friday isn’t particularly encouraging.

Analysts are projecting that second-quarter earnings of S&P 500 companies rose 42 percent, according to S&Ps Silverblatt.  Investors will again be watching the earnings and revenue figures along with guidance as concerns over a double-dip recession remain.  The Dark Horse Hedge maintains a SHORT tilt in our Long/Short approach to achieving higher Alpha (return over benchmark return) and Sharpe Ratios (return for each unit of risk taken) with a low Beta (correlation to market move and direction--i.e. we’re striving for less correlation to market movement).  

We will be watching the trend lines and technical signals this week to add new posititons.  If the market struggles and can’t penetrate the trend line, we will likely recommend adding 2 SHORTS and 1 LONG position.  In contrast, if the market reacts well to early earnings announcements and can break through the trend line, it is likely that the RSI and MACD will confirm a move through the 50-day Moving Average and provide reason to go to a BALANCED position by adding 2 LONGS.

We are continuing to hold our previously entered (July 1, 2010) short and long positions:…
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Three Change In Trend Chart Patterns To Profit From

Three Change In Trend Chart Patterns To Profit From

Courtesy of David Grandey

Change In Trends

Eventually all trends change. If you are short at a market low you need to know when to cover and get out. Likewise if you are long at a market high, here too you need to know when to get out. This is where Change In Trends patterns come into play.

 
At All About Trends typically there are three chart patterns we look for when it comes to change in trends. Considering we are at one-year highs we’ll focus upon change in trends from up to down. Those three chart patterns are: Double TopsTrendline breaks and First Thrusts Down. Below are examples of each.
 
Double Tops 
A Double top is just that. There are variations to this pattern though. One such variation is that of a shake out high. This is where an issue breaks above the prior high by a smidge and then rolls back over much like a shake and bake. The other variation is that of a continuation high. This is where an issue is further along in a correction then goes thru a rally period much like a snap back rally then proceeds to put in a double top an rolls over.

Below is a recent example of a name we shorted earlier in the year and below that is a continuation double top example 

Below is DRYS in a continuation double top. As you can see the issue has been in a correction for months then gets a retracement rally and that retracement rally ends with a double top. 

Trend Line Breaks
This is rather self explanatory in the sense that it’s simply all about a trendine break. Just remember bigger is better. The bigger the pattern in time duration and scope the better. Just take a look at TSL from January.

 

First Thrusts Down

This is when an issue is in a clearly defined uptrend that all of a sudden falls to either a prior support level or the 50 day average as in the case below (The Blue Box is the first thrust down), then it proceeds to make a rally attempt (Everything above the pink line). We call that rally attempt a snapback rally


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Zero Hedge

Another Decapitator-in-Chief Of America's Working Class

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Ben Tanosborn,

It is not Senators Elizabeth Warren and Bernie Sanders who don’t get it.  It is our near-sighted Globalist-in-Chief who really doesn’t get it, following in the footsteps of that other Republican-lite president, William Jefferson Clinton.  But what can one expect, given the advice he’s getting from a cadre of Wall-Streeters working with, or influencing, the White House?  Or, from a president who has confessed to being a “great admirer” of celebrated JP Morgan Chase chief, Jamie Dimon?

A few days ago Preside...



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Phil's Favorites

Whatever Happened to Antitrust?

 

Whatever Happened to Antitrust?

Courtesy of Robert Reich

Last week’s settlement between the Justice Department and five giant banks reveals the appalling weakness of modern antitrust. 

The banks had engaged in the biggest price-fixing conspiracy in modern history. Their self-described “cartel” used an exclusive electronic chat room and coded language to manipulate the $5.3 trillion-a-day currency exchange market. It was a “brazen display of collusion” that went on for years, said Attorney General Loretta Lynch. 

But there will be no trial, no executive will go to jail, the banks c...



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Chart School

eToro Review

Courtesy of Declan.

763 followers 76 copiers A solid jump in both followers and copiers from the start of the month. This was in large part to my top-10 ranking in their People screener. Having said that, last week finished very poorly for me. Overtraded and wa...

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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Kimble Charting Solutions

King Dollar & Crude Oil reversing ST trends, says Joe Friday

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

King Dollar and Crude Oil have been have had little correlation over the past year, as each has traded in pretty much opposite directions.

Over the past 9 months King Dollar has had a historical rally and the opposite is true for Crude Oil.

Of late Crude hit its 23% Fibonacci resistance line, based upon last summers weekly closing highs and weekly closing low on 3/13/15.

Joe Friday just the facts….Crude oil is making an attempt to break short-term steep rising support this week and King Dollar is attempting to break short-term steep falling resistance.

Crude oil just experienced its 7th largest 2-month rally in its...



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Pharmboy

Big Pharma's Business Model is Changing

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Understanding the new normal of a business model is key to the success of any company.  The managment of companies need to adapt to the changing demand, but first they must recognize what changes are taking place.  Big Pharma's business model is changing rapidly, and much like the airline industry, there will be but a handful of pharma companies left at the end of this path.

Most Big Pharma companies have traditionally done everything from research and development (R&D) through to commercialisation themselves. Research was proprietary, and diseases were cherry picked on the back of academic research that was done using NIH grants.  This was in the heyday of research, where multiple companies had drugs for the same target (Mevocor, Zocor, Crestor, Lipitor), and could reap the rewards on multiple scales.  However, in the c...



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Sabrient

Sector Detector: Bullish technical picture appears to trump cautious fundamentals

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Sabrient Systems and Gradient Analytics

By Scott Martindale

Stocks closed last week on a strong note, with the S&P 500 notching a new high, despite lackluster economic data and growth. I have been suggesting in previous articles that stocks appeared to be coiling for a significant move but that the ingredients were not yet in place for either a major breakout or a corrective selloff. However, bulls appear to be losing patience awaiting their next definitive catalyst, and the higher-likelihood upside move may now be underway. Yet despite the bullish technical picture, this week’s fundamentals-based Outlook rankings look even more defensive.

In this weekly update, I give ...



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OpTrader

Swing trading portfolio - week of May 18th, 2015

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Digital Currencies

Nasdaq's bitcoin plan will provide a real test of bitcoin hype

 

Nasdaq's bitcoin plan will provide a real test of bitcoin hype

By 

Excerpt:

Bitcoin, the virtual digital currency, has been called the future of banking, a dangerous fad, and almost everything in between, but we're finally about to get some solid data to help settle the debate.

On Monday, the Nasdaq (NDAQ) stock exchange said it would ...



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Market Shadows

Kimble Charts: US Dollar

Which way from here?

Chris Kimble likes the idea of shorting the US dollar if it bounces higher. Phil's likes the dollar better long here. These views are not inconsistent, actually, the dollar could bounce and drop again. We'll be watching. 

 

Phil writes:  If the Fed begins to tighten OR if Greece defaults OR if China begins to fall apart OR if Japan begins to unwind, then the Dollar could move 10% higher.  Without any of those things happening – you still have the Fed pursuing a relatively stronger currency policy than the rest of the G8.  So, if anything, I think the pressure should be up, not down.  

 

UNLESS that 95 line does ultimately fail (as opposed to this being bullish consolidation at the prior breakout point), then I'd prefer to sell the UUP Jan $25 puts for $0.85 and buy the Sept $24 call...



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Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 

Since...



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Promotions

Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene

 

The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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