June 24, 2008

"Passion and Perseverance"

It took Thomas Edison 3,000 tries to invent the light bulb. Without the first 2,999 tries (and the perseverance to continue trying) Edison would never have completed his invention.

The same applies to you and me. Though we are not in hot pursuit of a new invention, we are trying to stay upright in a market that is trying to knock us off our feet. Blow by blow, we must stand firm in our resolve to succeed in a market where others have certainly failed—or at least bowed out before it capsized them completely.

Technical analysis is not a cure-all, but there's no doubt of its effectiveness. We cannot claim to be impervious to the market's whims. But I can tell you with 100% confidence that we can make money and don't have to take cover or run away. At Trending123 we have the strategy to profit no matter how volatile the market is.

Our picks will be successful in every market, regardless of what the talking heads on television are trying to scare you about this week. We follow our own rules—four of them to be exact.

• Rule #1: Whether you take profits just in the nick of time OR you happen to take them too soon—Never look back! What's done is done.

• Rule #2: Never lose your cool. A tough one to maintain, to be sure, especially when your money is at risk.

• Rule #3: Never follow the market. The stock market and Trending123 stocks do not always work in tandem.

• Rule #4: Pay attention to the charts. We're chart watchers here at Trending123. And for good reason—chart patterns tell us what is really going on in the market and where our money should go and when.

As I've been pounding the table on for months now, the QQQQs continue to drastically outperform the overall market. That fact alone has me happy as a clam 'cause our portfolio picks stand to profit the most from the super-charged QQQQs!

No doubt about it—this is a lie-in-wait game. The picks have been chosen. Now all we have to do is wait for them to gain traction (and profits). A rally is pending … Be sure you are in the right stocks, so you can pounce on the gains with us!

Sincerely,

John Lansing
Trending123

P.S. FLIR Systems Inc. (FLIR) is Flourishing! Thus far my Trending123 subscribers and I have picked up around 12% gains from FLIR—but we're nowhere near the end of our profit haul! You still have time to jump in and make handsome profits!

The Power of 3

At Trending123, we rely on chart patterns and indicators/oscillators to give us direction. I've spoken a lot about patterns in past issues but it's been awhile since I've discussed indicators, which are of equal importance to my process.

There are 3 indicators that we use to identify where the market or a particular stock is headed. All three are key to understanding what is happening and even more important, what will happen.

Let's review them now:

Aroon

How do you tell when a new trend in a certain stock or index has begun? Look no further than the Aroon indicator.

The Aroon system uses two lines to plot market trends: an "Aroon up" line and an "Aroon down" line. The Aroon-up line measures how long it has been since the highest closing price, and the Aroon-down line measures how long it's been since the lowest closing price. When the Aroon-up line is going up and crosses the Aroon-down line as it is going down, that's a good indication that the trend is becoming bullish. When the opposite happens—that is, the Aroon-down line is going up and crosses the Aroon-up line as it goes down—that may mean the trend is becoming bearish.

PPO

PPO stands for percentage price oscillator. The PPO expresses the difference between a shorter-term moving average and a longer-term moving average as a percentage. For instance, a PPO of +5% means that the shorter-term moving average is 5% higher than the longer-term moving average. A PPO of -5% means that the shorter-term moving average is 5% lower than the longer-term moving average.

Because it's expressed as a percentage instead of as an absolute value, the PPO is very reliable. And that's why we can use it to help identify trend reversals: When the PPO rises above zero, it's bullish, and when it falls below zero, it's bearish.

Williams % Range

Larry Williams, its developer, used a scale of 0% to 100% to show the relationship of the current closing price relative to the range of prices from the highest to the lowest over a certain period of time. As the closing price approaches the high, the Williams %R will approach 0%. And as the closing price approaches the low, the Williams %R will approach 100%.

The Williams %R gives us an easy-to-read signal for when the trend might be turning bullish or bearish. If the Williams %R rises above the 50% line, it's bullish. If it falls below the 50% line, it's bearish.

Now you've got three tools that together allow you to identify what I call 1-2-3 bullish and bearish trend reversals. And as Trending123 subscribers have seen again and again, that's where the best profits are.

Learn more about these indicators and how to use them to profit by becoming a member of Trending123 today!