| stock market trading chart pattern research |
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| Sunday, February 26, 2006 |
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Monday, February 26 2007 - Nightly Update - The Best and Worst Charts for 2007
Nasdaq 100 Index -$NDX - Daily Chart - Diamond Continuation Pattern within Continuation Slim Jim/ Rectangle
The NDX wins the Oscar for the slippery as a snake chart. The pattern is never what people think it is. Slippery. It is no longer a head and shoulders pattern. It is still in a Diamond Continuation Pattern within Continuation Slim Jim/ Rectangle. Currently,the $NDX has broken out of the continuation pattern, to place new highs at the top of the rectangle, which also happens to be resistance. The NDX looks like it will probably back test the breakout line of the diamond continuation pattern. This is also where 34 EMA average is located, which as acts as a magnet for price retracement's. The $NDX is still in a 123 bullish trend reversal. However, the NDX looks short term toppy here. Therefore, please wait for new set ups. Do not front run. Patience is required now.
MERRILL LYNCH SEMICONDUCTOR HOLDRS ETF (SMH)- Daily Chart - Diamond Continuation Pattern within Continuation Slim Jim/ Rectangle The SMH the peek a boo above range Oscar award. Like the $NDX, the SMH has been consolidating in a lateral corrective / rectangle range bound move for the past 2 months. It is also in the same pattern as the $NDX. The SMH has broken out of the continuation diamond pattern, and has gone on to place new swing highs at the top of the rectangle, on heavy volume, which also happens to be resistance. Diamond patterns have a statistical pattern failure rate of 44%. This means that any diamond pattern has a 50% chance of being a continuation or reversal pattern. Since the SMH was already in a downtrend, and it bounced off of the lows, it really didn't
make any sense for it to be diamond topping pattern. Therefore, it appears to me that is has to be a continuation pattern, especially because it made new swing highs. I also happen to think INTC looks bullish. Furthermore, it appears to me the SMH and Intel trade opposite one another. Intel goes up and the SMH goes down and vice versa. One of them will pay off eventually. The SMH looks like it will probably retrace and back fill the gap now. The gap, coincidentally, happens to be at the breakout line of the diamond continuation pattern. This is also where 13 EMA average is located, which as acts as a magnet for price retracement's. The SMH has just entered a 123 bullish trend reversal on the Aroon indicator. When this cross occurs, expect a short term pull back. The rest of the indicators and oscillators are bullish and showing positive divergence. The SMH looks short term toppy here. Therefore, please wait for new set ups.
Do not front run. Patience is required now. We need the market to give us a clear picture of its short term direction right now. I want to wait for some really juicy set ups, that we can get on the down low. I want to get into new set ups with
Morgan Stanley Commodity Related Equity Index stocks
($CRX) - Weekly Chart - Bullish Continuation Ascending Triangle Pattern The Oscar this year goes to the $CRX. The $CRX has out performed the rest of the indexes by leaps and bounds and it made new 52 week highs today at 558.35. The weekly Chart illustrates that the $CRX spent last year consolidating in an impulse wave 3 to wave 4 pullback off the highs. This counter trend move, contains the lettered corrective wave that form the ABC zig zag move down to test the long term uptrend line. This Counter trend move forms the geometric shape of a bullish continuation ascending triangle pattern. The $CRX is now trying to clear resistance and breakout of the triangle, in an attempt to start its's next 5th leg up. Now it may stall or pullback from these levels. Be prepared for this. Remember there is still of upside potential for the $CRX in the long run and from a Big Picture point of view. The $CRX still has +100 points of upside potential long term. In addition, you can see that after the latest lows were placed at 516.38, the moving averages had a triple moving average crossover and the averages have been trading in a bullish fan ever since then. The indicators and oscillators are also in a 123 bullish trend reversal, and are showing clear bullish divergence. Upon breakout the $CRX will be in a bullish 5th wave up move. Looks good! I want to wait for new set ups in the commodity sector. I am watching AL, CENX, Cleveland Cliffs and others. I want to wait for a sharp swift dip in the $CRX before entering any new setups in this sector. One of the traits that distinguishes a good trader from a poor one, is the ability to use time as an ally. Patience is a trader's friend. An index/ equity will always have a pullback This is an opportunity that will give the patient trader the gift of a solid trade. The gift not only offers a good reward to risk ratio and good profits, but more importantly, the satisfaction that comes from making a good trade. Wait for my alerts.
$SILVER - Continuous Contract (End Of Day) INDEX - Weekly Chart - Bullish Continuation Ascending Triangle Pattern -
The best looking Commodity Chart - The Oscar goes to $Silver. $Silver has been on fire since the beginning of January '07. $Silver, like the $CRX and $Gold is in a bullish Continuation Ascending Triangle Pattern. The triangle contains the lateral ABCD corrective waves, which also constitute the impulse wave 3 to impulse wave 4 counter trend pullback. This consolidation has been going on since May of 2006. Right now, $Silver is at resistance, which is represented by the top of the triangle. After that resistance is cleared and confirmed, $Silver will continue up in a bullish impulse wave 5 move. This breakout looks imminent, and the Juice Man hasn't even really arrived in full force yet. All of the indicators and oscillators are in a 123 bullish trend reversal. The PPO is showing positive divergence and illustrates that the big move has yet to begin in earnest. I believe $Silver will outperform $Gold in next last leg up. (This bullishness has a lot to do with the Fed's money supply policies)
Novastar Financial (NFI) - Monthly Chart
The worst chart of the year - The Oscar goes to NFI. NFI, coincidentally, happens to be a sub-prime lender. Who new it drop another 20%! This is a perfect example of oversold becoming even more oversold! When does analysis turn into something that is correct, but we are not able to stay the course for one reason or another? We first bought NFI in 2002 and 2003 and we rode NFI up to the top with an incredible gain of 80 points. This was a buy and hold trade for the year. It was my best point gainer in 2003. The day before NFI came out with earnings in 2004, and this is pre-split, I issued a sell alert and I then issued a sell short alert. I said back up the truck on this short position as well as buy puts. We completed this trade with gains, although the puts did not work out. Then, later on as the months go by, in their 10 Q, something odd comes out, they realize that they found an office. This was supposed to mean something bullish, but I knew it was a warning. Then I issued another sell short alert, because I know that the stock is now in a bearish trend. When a stock is in a bearish trend you trade it. This in contrast to a bullish trend where you buy and hold. I also recommended buying puts at the second bear flag. My target was zero. We just were not able to stay in it because it traded sideways for another year and half until this year. It is now down 50% this year alone. MY POINT IS: SHORTING IS NOT AN INVESTMENT> IT IS ONLY A TRADE> TRADE THE BEAR RIDE THE BULL. IF you short a stock the most you can make is 100% this is in contrast to a long term investment which can go up 100% or higher. Therefore, the gains going long a buy a hold will always be greater than a short. Furthermore, if a trade does not make gains right a way there is no point of being in it. The only thing we trade a Trending123 is a stock that makes you money right away otherwise it is dead money. We want our money to be working for us. Everyone is wrong from time to time. That is why I DO NOT TRADE MY ANALYSIS, I TRADE THE SET UP. (Memorize that!)
Edited by :Andrea Victoria Friend aka Daisy
Editorial Assistant for Trending123.com
daisy@trending123.com
$NDX--SLIPPERY AS A SNAKE OSCAR WINNER FOR NOT BEING WHAT ANYONE THINKS
SMH--PEEK-A-BOO ABOVE RANGE OSCAR WINNER
$CRX--BEST INDEX FOR 2007 WINNER (TIED WITH A FEW OTHERS)
$SILVER--BEST COMMODITY OSCAR WINNER
NFI--BIGGEST DEBACLE CHART OSCAR WINNER
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