| Technical Analysis Stock Trading High Beta Part 4 |
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| Tuesday, January 16, 2007 |
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Nightly Update - Recap of the Weekend Update - Rectangles, Ascending Triangles, and Broadening/ Expanding Triangles
Good afternoon, the market just closed. I just want to let you know that I have been waiting to send out alerts and updates today. I apologize for this delay. The reason for this, is due to a glitch in our computer system and I did not want to crash the servers. Since, I had already discussed how today would play out on a short term basis in the weekend updates and have started up the Blog page, I assumed that everyone would be OK. For those of you that are new subscribers, or that have missed the weekend updates, I would like to review the time line or the method behind the madness regarding this past weekend's updates. If you remember, on Saturday, you received an update that said I would cover 8 stocks on Sunday. This was an update to give you time to do your homework or due diligence before Sunday's update came out. That way you had plenty of time to review the stocks before the update. I then created a trading journal sheet for you to use with each stock setup/update. I also talked about a seminar that I was going to give on Monday, Jan.15th, that would review all the new trade setups. In addition to all that, I also tossed in a little contest. The contest was about MIGP. What price is the best entry for this particular stock? The best answer given would win the contest/ prize. However, I left out a few things. Therefore, this update is going to cover why I did what I did.
The real reason why I did this weekend's updates the way I did, was due to some post's on the message board. Some subscribers suggested that they would like to be more organized when they trade. They wished they had a trading plan already laid out for them before the market opened so they wouldn't be compelled to trade in the heat of the moment. Well, on Friday night, I was watching a movie and also thinking about how I could help my subscribers. This movie is called The Jacket and it is about the mentally insane, yet there is more to the plot than the fact that it takes place in a nuthouse. Well, this environment is similar to the stock market, because sometimes you feel like you are in a nuthouse when you trade the stock market. In any case, in the movie, the protagonist has heard that there is a secret underground group called " The organization of the organized". Well, in the movie the crazy people start shouting "long live the organization of the organized, long live the organization of the organized!" This chant prompted me to think about the web site! It can appear a lot of time that there is chaos in the market and I wanted to get us all organized. Then, on Saturday, I picked out all the stocks that I wanted to cover for " sudden profits. " I also created a trading journal and log for you and got everyone prepared for the Sunday's Update. Now let's Recap the weekend update.
Sunday's Update was issued in 3 parts and covered 3 types of geometric patterns. The 3 types of patterns that I discussed are as follows: Rectangles, Ascending Triangles, and Broadening/ Expanding Triangles. These patterns are great to play for short term "sudden profit" setups. In technical analysis, there are only two of patterns that play out . These are continuation patterns and reversal patterns. T
Rectangles/ Slim-Jim Pattern - Please refer to AXR and MICC charts
The most reliable pattern for a short term trade is always the rectangle pattern. There is no such thing as a rectangle reversal. Therefore, we know that they are most reliable as a bullish continuation pattern. The reason AXR and MICC caught my eye is because they look so much like the $COMPQ chart before it broke out. The $COMPQ was a successful Classic Upside Breakout Pattern out of a 2 month long rectangle. That is why I want to play the aforementioned charts. What better type of stocks are there to be in, than stocks that we just played with exactly the same pattern. We know for a fact that rectangles are successful patterns. Now, let's discuss volume. Volume decreases during a consolidation because there is a lack of sellers. Then, in contrast, when the breakout of the rectangle occurs, volume increases. You can see this volume decline in the before charts, and then see the increase occur in the after charts of AXR and MICC. Another thing to consider when trading a Rectangle is the buy point. Entry typically occurs at Resistance rather than support, because once resistance is taken out it confirms the breakout of the rectangle. I specified to buy MICC at resistance. By looking at these charts you can really see "sudden Profits" occurring in action. I want to let you know that I did not send out e-mail alerts on these plays because I gave you the alerts this weekend on the updates and in the Seminar. Please keep in mind that this is the first time that I have issued this type of trading setup. I want to let you know now, that I will continue to put forth these type of updates. It is OK if you missed this seminar because more are coming up in the future. Don't worry, I will also continue to send out swing and investor trades.
Expanding Triangle / Broadening Pattern - Please refer to the BAP charts
The second most reliable pattern for a short term trade is the Expanding Triangle / Broadening Pattern.
Ascending Triangles - Please refer to the JLL charts
Out of the 3 patterns mentioned today, that are useful for short term trades, Ascending triangles are the least successful. However, they have a very high success rate for Swing and investor trades.
MIGP Chart
Below the Chart of MIGP, you will see that the chat room log. There you will read the guesses that everyone posted regarding the best entry price for MIGP. The reason I have posted this dialogue is to illustrate the divergence in opinion that occurs among traders. This difference in opinion is what makes a market work. If everyone had the same opinion there would be no market.
Trading Journal #1
The original Trading journal sheet: http://www.trending123.com/short-term-trades/trading_journal.htm
Trading Journal Format #2
If you want another trading journal format to use other than the one I issued, you can right click on the image and copy/paste it to your documents and print it out and use it instead.
Long live the Organization for the Organized!
Edited by Daisy
Andrea Victoria Friend aka Daisy
Editorial Assistant for Trending123.com
daisy@trending123.com
WEEKEND UPDATE RECAP--THE INSPIRATION
AXR
AXR
MICC
MICC
BAP
BAP
JLL
JLL
MIGP
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