March 4, 2008

“Let’s Get Trendy!”

Whether you are new to Trade Talk Weekly or you have been following me for awhile, you should know that I don’t run with the pack. No not wolves… although I am sure that some investment advisors can certainly act ferocious and wily at times!

Making my own rules and predicting the market’s movements with the help of my trending tools is how I make a living.  So you better believe that I know the ins and outs of the market.

But how do I do it? Well for one, I have made it my business—and my life—to read the “trends.” That’s how I can determine where the market has been, where it’s at now and most importantly, where I think it’s headed next.

Technical analysis is based on the fact that the prices of stocks move in fairly definite trends. Prices trend for individual stocks and for the market as a whole. Technical analysts—that’s me—use trendlines to identify the direction of the movement of stock prices and then to determine if and when the movement will change.

So what exactly is a trendline? It is a straight line drawn on a chart through or across the significant limits of any price range to define the trend of market movement.

Besides understanding how trendlines are created and which ones are dependable (because, yes, it is surprisingly easy to mistake a trendline), the most important aspect is determining how you can play the trend to your best benefit.

All trading decisions are highly dependent on the type of trend being followed. It is much safer and much more profitable to play the intermediate movements that run in the direction of the basic major trend, rather than the minor corrections that run counter to it.

Remember: the trend is your friend. Learn more about how trendlines and patterns can help you toward better profits!

Sincerely,

John Lansing
Trending123

P.S. We at Trending123 have found fast profits by following the trends. Just in January, we scooped up 19.23% gains from Sigma Designs in 6 days, 23.36% gains from Market Vectors Steel ETF in 18 days, 40.73% gains from an ultra-short oil & gas fund in 18 days and 22.71% gains from an obscure Russian mining company in 18 days! Don’t miss out on the profits we expect this month!

A Cure for the Range-Bound Blues?

In one week—from Friday to Friday we moved one hundred and twenty-two basis points and yet, we essentially went nowhere! Two steps forward, two steps back. Three steps forward, three steps back.

Clearly, we’re not making any headway stuck in this nauseating range.

You might think we can blame volatility. But actually what is happening is that we are swinging quicker and quicker up and down in a fewer amount of trading days. So though it is insanely volatile, it’s not because of volatility.

Can you wrap your head around that one? You see, right now we are range-bound which means that we are stuck in a very small tunnel of space. And the market is ping-ponging up and down in that very tight space.

Luckily this type of coiling doesn’t last forever. Whether it is the bulls or the bears—somebody has got to give up eventually. (And thank goodness because I might need to down antacid and headache medicine to combat this sick feeling!)

This cannot last forever. It will resolve itself—hopefully soon!

Broken Trendlines

When using trendlines, the goal is to either invest with the current trend until the trendline is broken, or wait for the trendline to be broken and then invest with the new (opposite) trend.

But in either scenario, you need to be able to determine that the trendline is in fact, broken. Here are the several factors to look for:

1. Volume—In some cases, penetration will be accompanied by increased trading in the stock.
2. Significant price movement—A slight correction in price is seldom a signal of a true break in an intermediate or major trend.
3. Closing price—Analysts will usually ignore breaks in the trendline which occur during the trading day, focusing instead on the closing price for the day.
4. Presence of a pattern—Analysts like to see a pattern formation at the end of a major or intermediate trend. A pattern signaling a reversal reinforces the importance of the break in the trendline