Tuesday, December 22, 2015

121815 MS Weekly - What is Missing in Your Risk Analysis?


Risk Analysis versus Gain Profit Potential

The least used and most often improperly used analysis by Technical and Retail Traders is Risk

Analysis. All too often, Traders are choosing high risk stock picks without realizing it. This

analysis is NOT using percentages, but rather using the technical patterns within the chart in

order to do the following:

1. Find the lowest Risk trade from a group of potential stock picks.

2. Determine the Risk versus the Gain Profit Potential BEFORE placing an order.

3. Determining the correct Stop Loss placement to avoid setting the Stop at a whipsaw

point, or not using a Stop at all due to not knowing how to use and set them correctly.

4. Selecting the strongest picks based on Risk Analysis, which reveals weaknesses in stock

picks that do not show up in Candlestick Patterns or MACD patterns.

5. Choosing stocks with Risk that you can tolerate. Too many times traders get greedy, and

choose picks that have higher Risk than they are ready to accept.

First of all, Stop Losses should NEVER be calculated using Percentages. This is an ancient, out of

date method that is the main reason why so many Retail Traders believe that Stop Losses do

not work. They are accidentally and unintentionally setting Stops based on a Percentage that

puts them right in the middle of a profit taking area where High Frequency Trading HFT will

trigger, OR where Dark Pool bargain hunting Time Weighted Average Price TWAP orders are

sitting and waiting for price to drop into that range.

Trading the automated markets along with Market Participant Groups that use Time Weighted

Average Price TWAP orders, Volume Weighted Average Price VWAP orders, and High Frequency

Trading HFT predatory millisecond orders requires using MODERN analysis and tools. It is hard

to abandon techniques learned on the internet that appear everywhere but in order to be

successful, Traders need to change how they approach trading.

When choosing a stock to trade among a group of stock picks, consider the Risk of the trade

based on technical Support levels appropriate for your Trading Style. Trading Styles include

Intraday Swing, Swing/Momentum Trading, Position Trading, and several others.

Strategies are selected AFTER a Trading Style has been chosen. Certain Trading Styles require

specific technical patterns, candlesticks, and Support levels for optimal trading success.  Buying

long versus Selling Short also changes Support and Resistance levels for each Trading Style.

As a chart example for Risk Analysis see Home Depot Inc. (NYSE: HD) below, which has an

Engulfing Black candlestick Sell Short signal.


As a Sell Short pick consideration, the chart shows that the Resistance is above price as

indicated by the red line. This is where the Stop Loss must be set rather than a Percentage. A

tight Percentage puts the Stop Loss in the middle of the Resistance which will create a whipsaw,

and a larger percentage such as 8 or 10% puts the Stop Loss far too wide adding Risk to the

trade.

The next area of calculation must be the Support, which is where the stock is likely to bounce

up as indicated by the green line. This is the highs of November, and may not hold over time

but is the first level of Support for this stock if it sells down further. Support therefore is based

not on a Percentage but the technical levels where bounces occur from Buy to Cover

professionals closing their position, OR from “Buy on the Dip” Small Lot Investors rushing to buy

into what they believe is a bargain.

Summary

By calculating the difference between the Resistance and the Entry Price, the Risk of the trade

is determined. By calculating the Support level where the stock is mostly likely to pause or

bounce, the run Gain Profit Potential is determined. The final step is dividing the points at Risk

by the points Gain Potential. Risk to Profit should be 3/1 or higher. Most of the time Retail

Traders are trading stocks with higher points at Risk than there are potential points to Gain.

Taking the time to calculate Risk using Risk Analysis will significantly improve your profitability

by eliminating high risk and low profit trades.

Trade Wisely,

Martha Stokes CMT

TechniTrader technical analysis using a MetaStock chart, courtesy of Innovative Market Analysis, LLC dba

MetaStock.

www.TechniTrader.com

Chartered Market Technician

Instructor & Developer of TechniTrader Stock and Option Courses

This weekly stock discussion is sponsored by TechniTrader.com a MetaStock® Partner



Copyright ©2015 Decisions Unlimited, Inc. dba TechniTrader. All rights reserved.

TechniTrader is also a registered trademark of Decisions Unlimited, Inc.



Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as

anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There

is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the

methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.

Monday, December 14, 2015

LEIBOVIT VR TUTORIAL FOR METASTOCK - U.S. OIL - USO - DEC 14, 2015

From the desk of Mark Leibovit

The decline in Crude Oil both longer term and short term were clearly signaled by the Leibovit Volume Reversal. I am often asked how the Leibovit Volume Reversal works in different time frames.  Here, we look at the monthly, weekly and daily charts.  All are demonstrated  utilizing the Sequential version of the Leibovit Volume Reversal. When you subscribe you receive all three versions (Sequential, Directional and 2-Day)  but I prefer using the Sequential because it shows all negative and positive Leibovit Volume Reversals. Please check the video on the Metastock product page for more information.  In the monthly chart, note the big negative Leibovit VR formed in July, 2014 confirmed by the declining 5/3/3 stochastic presaged the huge multi-month sell-off that is still occurring now. The weekly chart shows the two recent negative Leibovit VRs on Nov 9 and Nov 30 which provided additional confirmation of the current short-term downtrend - again confirmed by a negative 5/3/3 stochastic. And, finally, the daily chart reveals the Nov 25 negative Leibovit VR, the most recent short-term trading signal also confirmed by a declining 5/3/3 stochastic.


https://youtu.be/GnKftSG1_HY

Happy Trading
Jeffrey Gibby
Business Development Manager


Monday, December 7, 2015

LEIBOVIT VOLUME REVERSAL TUTORIAL ON METASTOCK FOR UUP AND SGOL - DEC 7 2015

From the desk of Mark Leibovit,

A Positive Leibovit Volume Reversal on November 3 in SGOL - the ETFS PHYSICAL SWISS GOLD ETF (Daily chart) combined with a rising 5/3/3 stochastic set the stage for Friday's big rally that posted a second day of increasing volume. SGOL. The downside gap of 107.75 formed back on November 16 should now be filled. SGOL closed at 106.05. Of course, it could go further than that, perhaps up the 50 day moving average which now stands at 109.29.   On the weekly chart, SGOL posted an upside 'Key Reversal' pattern, but unfortunately not on increasing volume. Still, the pattern is bullish.

A Negative Leibovit Volume Reversal was formed in UUP  in the Daily chart (Powershares U.S. Dollar Index) on November 3 accompanied by a declining 5/3/3 stochastic.  Though UUP held its 50 day moving average for this go-around, it appears the trend has now turned lower in the U.S. Dollar confirmed by the 'Key Reversal' on increasing volume in the Weekly chart.

All are shown in the accompanying video.



Happy Trading!

These products are not a recommendation to buy or sell, but rather a guideline to interpreting the specified analysis methods. Only investors who are aware of the risks inherent in securities trading should use this information. MetaStock in no way endorses the products and services advertised and accept no liability whatsoever for any loss arising from any use of these products or their contents.

Monday, November 30, 2015

METASTOCK -LEIBOVIT VOLUME REVERSAL TUTORIAL FOR DISNEY -DIS - NOVEMBER 30, 2015

From the desk of Top Market Timer, Mark Leibovit:

Last week I showed a beautiful example of a Postive Leibovit Volume Reversal at work in Nike (NKE) and this week I have a beautiful examle of a Negative Leibovit Volume Reversal.  This was posted in Disney (DIS) on November 24, ahead of Friday's negative ESPN story which drove the stock down sharply intraday.  My favored 5/3/3 stochastic helped confirm the trade.  

https://youtu.be/Yp4xj_I8ywU

Happy Trading.

Friday, November 20, 2015

112015 MS Weekly – Buying Into Strength in Stocks

“Buying Into Strength” in Stocks
Use A Professional Trader Strategy  
Buying Into Strength in stocks is a standard professional strategy that helps Retail and Technical Traders avoid whipsaw action, and temporary retracements caused by large lot profit taking.
The chart example below will help explain why buying into strength is the preferred choice of professional traders, rather than using a Limit Order that gets you in at “a better price.”
The daily chart view in this example shows a consolidation, then a move up a little and then another consolidation. Say for this chart example you are trading the Swing Style resting day entry patterns, and feel this may be a good entry point before the stock moves up again.  
The rule of entry is to “Buy Into Strength.” However you have heard other traders talking about getting into a stock using a Limit Order that says, “Buy Me In At This Price Or BETTER” which means “LOWER” in the marketplace. You feel pretty good about this new strategy, so you enter a Limit Order to buy into this stock.
The next day the stock drops, but the order is executed. You are not too worried because of confidence that this stock is trending up, using your favorite indicator MACD which is a momentum Moving Average based indicator. See the MACD indicator window below for this stock.
You hold for several more days but the stock continues to move down rather than up. A big Engulfing Black Candlestick forms, and the choice is to either sell out at a small loss or hold on desperately hoping that the stock will reverse.
Those who choose to hold hoping it will turn around, find themselves losing even more money as the stock drops further. Now by this time most short term Retail Traders have given up and sold out.
The reason many traders lost money is that they bought into weakness using a Limit Order, allowing the computers of the market to buy them in as the stock was falling in price. Not a good idea. The notion is to “save” money with a Limit Order, but more often than not the above scenario happens.
Buying Into Strength in Stocks means the following:
1.  Analyzing the strength of the VOLUME indicator as well as giant to large lot Institutional Investing Dark Pool activity, to determine that the stock is going to move up and has enough strength to sustain that move.
2.  Using a controlled bracketed order that ONLY triggers if the stock does move up into a personal buy zone, and also controls what price is paid for the stock.
The “Buy into Strength” bracketed order ONLY triggers when the stock moves up into your order price. Then you would be in a stock that is moving up making nice profits, rather than a stock moving down.


Summary
The chart example did have upside potential. However many Pro Traders took profits early and many Retail Traders got over zealous and started Selling Short, which caused a brief correction.  
The downside sell off was very brief because during the same time as the profit taking and selling short, Mutual Funds were being invested by those small lot Investors who use them. This increased the money in funds accounts, allowing giant to large lot Mutual and Pension Fund Institutional Dark Pool Investors to jump into good stocks, which is revealed in the TechniTrader Quiet Accumulation TTQA Indicator in the bottom chart window.
The Gap took the stock back to its original buy in price, and the stock ran up in a Velocity Run for 4 days. Limit Orders are usually used improperly by Retail Traders, and are the cause of many poor trades. Notice that the TechniTrader® indicators were weak on the initial setup, but much stronger after the gap.
Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using a MetaStock chart, courtesy of Innovative Market Analysis, LLC dba MetaStock


Instructor & Developer of TechniTrader Stock and Option Courses
This weekly stock discussion is sponsored by TechniTrader.com a MetaStock® Partner

Copyright ©2015 Decisions Unlimited, Inc. dba TechniTrader. All rights reserved.
TechniTrader is also a registered trademark of Decisions Unlimited, Inc.

Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.

Monday, November 16, 2015

MARK LEIBOVIT VR VIDEO ON METASTOCK - NOVEMBER 16, 2015

From the desk of top market time Mark Leibovit:

Leibovit Negative VR signals forewarned of current decline. On the daily for DIA (DJ Industrials ETF) a Negative VR signal was flashed on November 5 (that is seven days back).  Flipping to the weekly chart an ominous Negative VR was just formed last week and the question now arises whether we're going to mirror a similar pattern formed back on July 20, one month before the August 24th flash crash. In both instances my 5/3/3 Stochastic Indicator provided and is now providing downside confirmation. This is Options Expiration Week and tomorrow is a potential 'Turnaround Tuesday'.  With the Paris terrorist attack upsetting financial markets and the markets heading south, the question now arises whether such 'outlier' events will change any Federal Reserve plan to raise interest rates in mid-December.  Borders, Language and Culture  now come to the forefront for all nations.


Happy Trading. 

Saturday, November 7, 2015

VR Trader Training on CMG

From the desk of Top Market Trader Mark Leibovit:

The e Coli breakout in Chipotle (CMG) restaurants in the Pacific Northwest was in the headlines but VR analysis warned a bit ahead of time. The story regarding the e coli outbreak hit the 'Street' on October 30, but a series of Leibovit Negative Volume Reversals on the daily chart  begin to appear beginning on September 18.  There were, in fact, eight Leibovit Negative Volume Reversals formed prior to the big break on October 21 which took the stock down 60 points in one day (it then declined another 54 points counting this past Friday).  For short-term traders, a declining 5/3/3/ stochastic confirmed most the Leibovit Negative Volume Reversals. check out the video also for a look at the weekly Leibovit Negative Volume Reversals and even a positive one from way back in July which provided a bullish trade. The Volume Reversal (tm) is a powerful indicator in both directions, but you already know that! I've know that for 35 years!


Happy Trading
Jeff Gibby.  

Monday, November 2, 2015

Leibovit Volume Reversal for Valeant- VRX

From the desk of Mark Leibovit,

Putting aside the negative news surround Valeant (VRX) the past few weeks, my proprietary Leibovit Volume Reversal provided not only confirmation of the downtrend but several excellent trades.  As you know, I use the 5/3/3/ stochastic as a confirming indicator and here in this video we look at both the daily and weekly charts tying the Leibovit Volume Reversal with it.


Happy Trading.  

Monday, October 26, 2015

[VIdeo] How to Better Predict Prices with the LCI and the MetaStock FORECASTER


102315 MS Weekly - Differences Between the Uptrend and the Downtrend


Differences Between the Uptrend and the Downtrend
How Stop Losses Trigger High Frequency Trading
The Uptrend and Downtrend are not mirror images of each other, nor can you use the exact same indicators, indicator period settings, or subordinate indicators.
Many Retail Traders assume that if they learn the upside price action that when the trend turns down it is just the opposite price action. That is why so many traders struggle to exit stocks before the trend tops and runs down. In addition it is why many Retail Traders who try to Sell Short as well as Options Traders who buy Puts, take so many losses in their trading.
If you are a Position Trader, you will be trading the Uptrend and Sideways trend.  If you are a Swing or Day Trader you must trade the Uptrend and Downtrend, and adapt for the Sideways Trend. Swing and Day Traders must be able to take advantage of both the upside and downside price action to net profits, that are close to what a Position Trader can achieve. However the Position Trader will generally always have far higher returns.
The sell side or Downtrend is very different from the Uptrend or Sideways Trend because there are fewer Market Participant Groups.
List of Market Participant Groups that do not Sell Short:
  1. Giant Pension and Mutual Funds do not sell short. They may buy Option Puts or Ultra-Bear ETFs, as a hedging or mitigating strategy when the market goes down as they are longer term investors.
  2. Smaller lot investors
  3. Corporations
  4. Billionaires and other wealthy individuals
  5. Foreign Funds
List of Market Participant Groups that do Sell Short:
  1. High Frequency Trading Firms HFTs
  2. Professional Traders
  3. Some Retail Traders do, or use Options to make profits during a Downtrend
That is why the downside trend is so very different than the upside or sideways trend.  Here is a Here is a list of Downtrend characteristics:
  1. The Downtrend often has much steeper Angles of Descent™ immediately causing a severe drop in price and often gaps, as HFTs trigger on news events.  
  2. The Downside also has larger rebounds as it bounces off of Support.  
  3. How fast the price will fall is dependent on many factors, but the most important factor is always the number of HFTs that trigger the sell-off.
  4. The Downtrend can drop with low Volume, and can at times gap down through Technical Support levels. This is due to how and where the Retail crowd and the Smaller Funds set their Stop Loss.
A common mistake that many Independent Investors and Retail Traders make is to use a percentage Stop Loss. Since everyone in these groups all use the same percentage Stop Losses, there are many strategies used by HFTs and other professionals that cause these percentage stops to trigger. When this happens the stock usually hits the Stop Loss then rebounds back up.
It is the “Cluster Order Syndrome” which triggers HFTs and other algorithms, searching for orders that are clustered around a percentage.  As a stock drops, Stop Losses are triggered and the stock plummets.
Summary
The Downtrend behaves very differently than the Uptrend because not all of the 9 Market Participant Groups Sell Short. More than half of the Market Participant Groups hold stocks for the long term.  On the Downtrend, algorithms dominant and many search for anomalies in order flow called “Cluster Orders.”
When Independent Investors, Retail Traders, Small Funds, and other groups all use the same percentage such as an 8% or the more popular 10%, it creates a huge Cluster Order at that price range. Algorithms can search for these Cluster Orders that then cause huge sell downs, because of the combination of Selling Short AND Stop Losses firing off at the same time. A stock often plummets within seconds when Stop Losses trigger all at once.
Trade wisely,
Martha Stokes CMT
http://www.TechniTrader.com

Instructor & Developer of TechniTrader Stock and Option Courses
This weekly stock discussion is sponsored by TechniTrader.com a MetaStock® Partner

Copyright ©2015 Decisions Unlimited, Inc. dba TechniTrader. All rights reserved.
TechniTrader is also a registered trademark of Decisions Unlimited, Inc.

Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.



Sunday, October 25, 2015

Market Snapshot by Mark Leibovit.

From the desk of Top Market Trader Mark Leibovit.

This week I am taking a quick snapshot of both Negative and Positive Leibovit Volume Reversals in high-flyers some that clearly went against the uptrend and others that helped make it happen. We are looking at Positive Leibovit Volume Reversals (VRs) in AAPL, GOOG, MSFT and Negative Leibovit Volume Reversals in IBM and TSLA.  Check out the video.




Tuesday, October 6, 2015

Why every Trader needs a P&L Cash Flow Model by Roy Swanson

Why Every Trader Needs a P&L AND Cash Flow Model
Roy Swanson, Founder, SteadyTrader.com


You’ve heard the advice before. Treat your trading like the business it is. Yet, every business manager has a P&L spreadsheet model to go by, while individual traders simply hope for the best most of the time.

At SteadyTrader, we’ve built a comprehensive Trading Strategy P&L -- a spreadsheet model that can be used by individual traders.  You can put all the parameters for ANY long trading strategy into the model within just a few seconds — and it instantly calculates your Annual P&L.  Plus, it rolls out the strategy’s Daily Cash Flow.  As you may have learned the hard way, “daily cash flow’ can be the hidden time bomb that sinks more trading accounts than anything else. 

We all tend to assume we know what metrics make one trading strategy better than another.  But once you see a real trading system P&L at work, you'll change your mind quickly.  Plugging various values for things like "avg. hold", "% winning trades", "avg.gain per trade" often yields results -- at the P&L level and Cash Flow level -- that are quite surprising, if not shocking to many trades.

Watch the demo here; then download your copy at SteadyTrader.com 

Monday, October 5, 2015

100515 MetaStock.com - Candlestick Patterns: Extraordinarily Indecision Day Candles

Candlestick Patterns: Extraordinarily Indecision Day Candles
List of Guidelines for Their Market Conditions
The Indecision Day Candle is a day where neither the sellers nor the buyers took total control of price, and moved it strongly in one direction. Indecision days are mostly very small bodied candles with small wicks and tails that are longer than the body. They often form in consolidations, or during periods of sideways action. However they also occur as a severe anomaly during extreme sell-offs that rebound in the same day, due to the new circuit breakers the SEC has installed in the automated market place that slow down selling during a fast paced selling spree.
The circuit breakers replaced the Uptick Rule a decade ago but still are under adjustments and modifications because severe one day sell-offs are a rare event in the market.
The stock chart below of Ameriprise Finance Inc. (NYSE: AMP) is marked with a red arrow on 8/24/15 to show an example of an extraordinarily large Indecision Day Candle.

Extraordinarily Indecision Day Candles can be problematic for Technical Traders to know how price will behave next. These create extreme patterns in Price and Time Indicators such as MACD, Stochastic, and Bollinger Bands® as well as other highly popular indicators making the interpretation skewed in reaction to the severe price pattern.
Here is a list of guidelines for dealing with severe sell down Market Conditions action that create numerous extraordinarily Indecision Day Candles, which distort price so much that Price and Time Indicators are not giving a proper signal:
  1. The extraordinarily indecision day is caused by a Market Event or Global Event, and therefore doesn’t represent the trend on that day.
  2. If the stock has already been Trending Down, the rebound within the indecision day can be huge on that day. However most of the time the following day will be a down day, continuing the original trend.
  3. If the stock is in an Uptrend, the extraordinarily indecision day will be followed most often by gap up that sells down creating a black candle. The following days the stock will slowly sort out the selling and return to the uptrend.
  4. If the stock was in a Topping Formation that had not completed prior to the severe indecision day candle, then the following day the stock may move down without a gap up at open. Then volatile action up and down with larger than normal candles tends to follow the topping completion, before a true Downtrend develops.
Summary
Extraordinarily Indecision Day Candles temporarily alter the trend, and it can take weeks to pattern out the price action and return the trend to its true direction. During that period of time the stock may run up on what appears to be a reversal pattern, only to hit mild resistance and fall steeply. When trading after an extraordinarily large indecision day caused by a major global event or shock to the market, it is important to not trust the Price and Time based indicators but to watch Volume, Volume Oscillators, Accumulation and Distribution Indicators, and Large Lot versus Small Lot Indicators to determine the short term direction the stock will take before the anomaly is patterned out of price.
Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using a MetaStock chart, courtesy of MetaStock.com

Instructor & Developer of TechniTrader Stock and Option Courses
This weekly stock discussion is sponsored by TechniTrader.com a MetaStock® Partner

Copyright©2015 Decisions Unlimited, Inc. dba TechniTrader. All rights reserved.
TechniTrader is also a registered trademark of Decisions Unlimited, Inc.

Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.

Wynn, VR Tutorial from Mark Leibovit.


From the desk of top market trader Mark Leibovit:

Two stories hit the tape Friday morning that impacted gaming stocks, in particular Wynn Resorts (WYNN) and Las Vegas Sands (LVS).Chinese government pledged support to Macau's economy which had been faltering due to previously imposed austerity measures. Li Gang, the head of the Chinese government's liaison office in Macau, said the central government is considering plans to "support Macau's economy in all aspects," according to the South China Morning Post. The government plans to help boost growth in Macau, including the potential approval of the region's maritime expansion plans by the end of the year. The Chinese government is also looking to help the region boost its tourism.  Technically, a Leibovit Positive Volume Reversal was formed and was identified INTRADAY and we purchased both WYNN and LVS.  Volume was clearly running a pace early in the session that strongly suggested a Leibovit Positive Volume Reversal would be formed.  We had been monitoring WYNN and LVS for weeks for any sign a trading bottom might be formed.  For example, WYNN had declined from $249 to $50 from March, 2014 to date and was ripe for a huge technical bounce.  Looking at resistance in the 50 day, 50 week and 50 month moving averages, upside potential is to 80, 124 and 139, respectively.  As a trader, I would be thrilled to get a pop to 70-75 which would represent at 20 to 25 point rally.  The bad news. Should the rally fail and using Volume Reversal theory, I would not want to see the October 1 low of 50.96 breached. That would have to be your stop.

Monday, September 28, 2015

LEIBOVIT VOLUME REVERSAL TUTORIAL FOR IBB - SEPTEMBER 28, 2015



From the desk of Mark Leibovit.  

Many attribute the recent sell-off in Biotech to Hillary Clinton's comments late last week that she might consider some form of price controls on drug companies. In particular, Biotech has been under distribution for several months as seen in the charts herein presented. Biotech is way, way overvalued with most the companies have no earnings whatsoever. Leibovit Negative Volume Reversals confirmed by a declining 5/3/3 stochastic have been present since July. I've counted nine Leibovit Negative Volume Reversals since mid July on the Daily chart seen in the attached video. The weekly chart show equivalent distribution with potential down to the 200 week moving average now trading at 238. 

Friday, September 25, 2015

091815 MetaStock Weekly - Support and Resistance During a Downtrend

Support and Resistance During a Downtrend
Market Correction Chart Example
The strength in the levels of support and resistance during a Downtrend or market correction alters as the stock moves down. Often moderate support levels can be broken through with ease and speed, as selling accelerates and momentum drives price down. This is especially true of stocks that are frequently traded by High Frequency Trading firms, Pro Traders, and larger lot Retail Traders.
Normally the low of an upside gap would provide moderate to strong support for a stock in a Downtrend or market correction, especially if the gap was a breakaway gap. See chart example below.


This is a good example of how quickly a stock can fall through a moderately strong support level in support and resistance during a Downtrend. The gap shown with green arrows was a breakaway gap, and is one of the strongest gaps that form in the stock market. It was a High Frequency Trading gap and the stock began to Downtrend without making a higher high from that gap. The support was broken through on a huge run down day, breaking through the gap support area easily. The day after that was another gap down day, which then reversed for a single day.
The velocity at which stock prices can fall is predicated on the Market Participant Groups who sell in panic mode. High Frequency Trading firms often trigger huge runs and gaps down, which in turn trigger Volume Weighted Average Price VWAP sell orders that drive price right through support levels.
For Beginner Traders trying to learn how to navigate through a highly volatile selling pressured market, it is imperative to learn which support levels will hold and which will cave easily to the selling pressure.
For Traders who are learning to Sell Short, it is just as important to be able to determine which technical support level will halt the Downtrend, even if it is only a one day reversal.
Understanding support and resistance during a Downtrend will help all Retail and Technical Traders earn higher profits and avoid trading losses making it more enjoyable, easier, and far less frustrating. Here is a list of what and where is needed in education regarding the Downtrend:
  1. How and why Price moves in a Downtrend
  2. Where Support will cause Professionals who are Technical Traders to Buy-to-Cover their Sell Short positions
  3. Where bargain hunter Dark Pools will start buying
  4. Where “Buy-on-the-Dip” Investors accidentally make the mistake of buying too soon in a Downtrend
Volatility can be a Retail Trader’s best friend. In addition every Trader needs to learn more than just a few Candlestick Patterns, Indicator Crossover Signals, and basic Strategies.
Trade Wisely,
Martha Stokes CMT
www.TechniTrader.com
Instructor & Developer of TechniTrader Stock and Option Courses
This weekly stock discussion is sponsored by TechniTrader.com a MetaStock® Partner

©2015 Decisions Unlimited, Inc. dba TechniTrader. All rights reserved.
TechniTrader is also a registered trademark of Decisions Unlimited, Inc.

Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.