Technical Analysis - Potential Trading Opportunities

[Client]

Client I note on your website that you have said "It's Time To Trade Cherokee ". BUT all you have is a hopeful target. Where is the stop, where will you be proven wrong, how are you going to manage this?
Why do you pimp a trade without any regard for proper trading practise?
Are you taking this trade?

I never say about exact entry points or where you should buy, sell or stay out of the market because each trader has his own trading system, appropriate risk level and time frame to trade. I just try to predict price movement and give some arguments why it will probably move this way and not another. But I don't write about how someone should trade. Stop losses and entry points are your own decision and maybe this time this is not the best stock to trade. And the title... well I guess it was really bad one.

 

[Client]

The price of Impax Laboratories Inc (IPXL) increased by more than 3 times from April 2009 to March 2010 that you can see on the chart below.
Now IPXL hit the trendline and formed a Hanging Man pattern. These circumstances give us signals that this is a possible reversal point. Most probably, the price will retrace to the support level at $15.

Weekly chart of IPXL​

The daily chart below reveals a Bearish Engulfing pattern near the trendline and one of the possible wave counts which admits that the major third wave is finished now and we should wait for a correction to the support line mentioned before.

Daily chart of IPXL​

Arguments for downside movement:
- the price reached the upper trendline;
- Hanging Man on the weekly chart;
- Bearish Engulfing on the daily chart;
- the end of the third major wave according to one of the possible wave counts.

Arguments for upside movement:
- the price is above MA (34);
- bulls were strong during the previous 2 weeks and now continuation of the rally is possible after passing beyond the resistance level.

 

[Client]

The weekly chart of St. Joe Co (JOE) shows us the upside price movement, presumably, in the form of a complex correction W-X-Y according to the Elliott Wave Principle. The W-part is presented by a Zigzag pattern which is followed by the symmetrical triangle (X-part) and now we can expect that JOE will reach new highs after breaking the upper line of the triangle (Y-part).

On the daily chart below you can see the most probable scenario for the next few weeks. The price couldn’t pass over the lower trendline of the triangle and now is going higher.

Arguments for upside movement:

* the end of the Triangle pattern on the weekly chart which is usually followed by a rapid breakthrough;
* the price couldn’t pass over the support level on the daily chart;
* Symmetrical Triangle is known as a continuation pattern.


Arguments for downside movement:

* the price is below MA (34);
* Triangles often serve as a last part of a complex correction.

 

[Client]

Once again the price of DTS Inc (DTSI) tested the resistance level at $35.86 shown on the weekly chart below. The last few rising bars were supported by low trading volumes pointing to a possible reversion.

Weekly chart​

2 bearish candlestick patterns were formed on the daily chart near the top, such as High Wave and Last Engulfing Top. Another reversal signal is the number of rising bars 9according to the Candlestick theory. There were no significant correction for a few weeks that means that the trend becomes exhausted (overbought).
It is not clear if the new downtrend starts now but a rollback to $32.5 is very possible.
Another support level to consider is the middle of the previous long bullish bar - $34.2.

Daily chart​

Arguments for downside movement:

* the price reached an important resistance level;
* 2 bearish candlestick patterns at the top;
* 10 rising bars on the daily chart without any significant correction which means that the trend becomes exhausted (overbought);
* very quick upside movement during last month.


Arguments for upside movement:

* the price is above MA (34);
* third testing of the resistance level may cause breakthrough;
* previous upward movement demonstrated the power of the bulls which may be not over yet.

 

[tech/a]

This is all very nice but.
You may as well flip a coin as there is just a 2 way analysis analysis on each chart.
There isnt an arguement for Nothing happening I note.

No suggestions on how to best position a trade---yeh its up to the trader I know but Any stock at resistance or support/or pattern or even oscillator over bought over sold can be given this rudimentary 2 sided analysis.

Just seems pointless.

 

[BBand]

Yep - been there , done that, spent a lot of TA hours monitoring watch lists waiting for trades to set up

Now in my retirement years, my time is more precious

I have now gone full circle and back using only a few indicators for trading - and my results are as good as, if not better than when I was using PA etc

I now allocate a max of half an hour each week day to trading

I can use my indicator(s) to scan a universe of stocks for potential trades for the next day (trade the dailies), in a couple of minutes
There are no if, but, maybe's in my trading now - the signal is either there or its not

Like everything else in life, not every signal is borne equal, its our job as traders to pick out the A+ trades - with practice its not that hard.
AND no matter which style of trading you use, one's about as good as the other when it comes to accuracy!!

Indicators - late signals (not always, sometimes even earlier), - oh dear - its a bar late!, big deal

I have never had the inclination to day trade - I definately could not handle it, sitting waiting for a trade to set up - that takes a special type of person, and I don't think indicators will work too well there anyway

When learning to trade, have an open mind, what's the bees knees for someone may not work for you - but try them all, you never know

Peter

 

[Client]

This is all very nice but.
You may as well flip a coin as there is just a 2 way analysis analysis on each chart.
There isnt an arguement for Nothing happening I note.

No suggestions on how to best position a trade---yeh its up to the trader I know but Any stock at resistance or support/or pattern or even oscillator over bought over sold can be given this rudimentary 2 sided analysis.

AND no matter which style of trading you use, one's about as good as the other when it comes to accuracy!!

You are both right. Well, mostly right. Actually, I was going to write an article about all these trading features and strategies as a whole. But 24 hours a day is not enough for me...

 

[tech/a]

But 24 hours a day is not enough for me...

I have a smile at this.

If trading was that simple and that profitable and that easy for people to master and technical analysis WAS/IS the key to compounding profits and no worry leverage then 24 hrs would be ample,we'd all be spending 6 hrs a day making squillions.

Ever noticed how those who appear to be making squillions have associated businesses in the background.

Mind you there is more to be made selling "The dream" than living the dream.
Simply good business.

 

[Client]

The downward correction of Pfizer Inc (PFE) stopped at the Moving Avarage (34) and developed a bullish Morning Star pattern. Now we can expect the price to move up to the level of approximately $19.5-$20.

One of the most important bullish signals here is a breakthrough of the downward trendline on the daily chart. At the same time there is a 3 Inside Up candlestick pattern which increases the possibility of a bullish scenario. The first target is a $18.7 point. Another one is $20 point which was shown before on the weekly chart.

Arguments for upside movement:

* bullish morning star on the weekly chart;
* the price went above MA (34) on the weekly chart;
* bullish englulfing and 3 inside up on the daily chart;
* the price broke the downward trendline on the daily chart.


Arguments for downside movement:

* the price is still below MA (34) on the daily chart;
* the level at $17.70 (the middle of the long red bearish candle) is a significant resistance level which can stop upside movement.

 

[Client]

This day we should pay attention to Microsoft, one of the most well-known tickers listed in Dow Jones index. The last 6 weeks the stock was in the upside movement and almost reached the previous top at $31.

Weekly chart of MSFT​

Sellers didn't allow the price to go higher than the middle of the long bearish candle. A Shooting Star pattern with a long upper shadow appeared though hasn't been confirmed yet.

Daily chart of MSFT​

The price couldn't break the resistance level at $30 that you can see on the daily chart above. Along with that 2 bearish candlestick patterns were formed: Shooting Star and Engulfing. Additionally, there is a possible zigzag pattern which represents the whole upside movement. It is marked by A-B-C and may be over at the moment. From now we can expect at least a correction down to the level of $29 but the major downward trend should also be considered.
Despite the fact that the price is above MA (34) and upward trend is currently developing, there are many bearish signals that tell us about a reversal.

Arguments for downside movement:

* shooting star on the weekly chart;
* the price couldn’t go higher than the middle of the long bearish candle on the weekly chart;
* shooting star and bearish engulfing on the daily chart;
* the price couldn’t break the resistance on the daily chart;
* possible A-B-C correction is over on the daily chart.


Arguments for upside movement:

* the price is above MA (34);
* upward trend is developing;
* shooting star is not confirmed yet on the weekly chart.

 

[tech/a]

CRAY Analysis direction --Long---Correct
EXPE Analysis direction--- Long---Flat
AA Analysis direction ---Long---Flat
CHKE Analysis direction--- Long---Flat.
IXPL---cant find
JOE Analysis direction---long---Correct
DSTI Analysis direction---Short---flat

What use is this?

 

[Client]

CRAY Analysis direction --Long---Correct
EXPE Analysis direction--- Long---Flat
AA Analysis direction ---Long---Flat
CHKE Analysis direction--- Long---Flat.
IXPL---cant find
JOE Analysis direction---long---Correct
DSTI Analysis direction---Short---flat

What use is this?

lol. I see some sort of disbelieve in your eyes Of all those tickers you listed only IPXL failed. All others are correct. Your meaning of flat is very specific. Or do you expect the changes like 200%?...

 

[Client]

Edison International (EIX) is traded above the Moving Avarage (34) and about a mont ago we had a 3 Inside Up pattern on the weekly chart. The bar with the open price = the closing price strengthens the model.
Beside that EIX couldn't break the support level.

On the daily chart below you can see that the upward trend is supported by the lows at $32, $32.50 and $33.50. The last bullish models are Hammer and Morning Star. See the forecast below.

Arguments for upside movement:

* The price is above MA (34);
* 3 Inside Up pattern on the weekly chart;
* Morning Star and Hammer patterns on the daily chart;
* The price couldn’t break support level on both weekly and daily charts.


Arguments for upside movement:

* the price could hardly reach new high after the 3 Inside Up pattern on the weekly chart;
* resistance at approximately $34.50 can stop the rally.

 

[Client]

Massey Energy Co (MEE) is coming to its highest point. This scenario is supported by some reasonable arguments. See the charts below.

Weekly chart of MEE
​

A significant resistance level was reached not so long ago. Beside that, on the second weekly chart below one of the possible wave counts is presented.

Weekly chart of MEE​

According to it, the third major wave can be split into 5 smaller waves. This whole movement seems to come to its end and now we can expect the development of the fourth corrective wave.
As you may know, a correction that comes after the end of 5-wave movement usually reaches the beginning of the previous smaller 4th corrective wave. Apart from that, it usually breaks the ascending trendline shown on the forecast above.

Daily chart of MEE​

The even smaller level of the recent rally suggests other 5-wave. This is the structure of the fifth wave of the major third wave. I hope you are not confused yet... The upside movement is developing within the channel which is usually broken rapidly after reversal starts.
Another tip is the type of the last part of this rally (approximately from $48.55 to $54.69). It is called Rising Wedge and is a reversal pattern. It shows that bulls are losing their strength.

 

[tech/a]

Client.

FLAT---Neither failed nor validated

There is a point where analysis should be seen as validated or not,where the original reason for taking the trade is still true.
Some of these flat trades are at that point where the analysis is dubious.

I don't know about you or others but I like to see my analysis validated strongly and early. Unless its a systems trade and then you follow the system regardless of outcome---you have a systems test blueprint to go by.

While in the cases below 1 may have been stopped out your open profit would be pretty poor relative to risk.
You have 2 trades "at the time" trading well and 6 which have capital tied up doing very little.

I haven't been back to see if the original analysis is still valid but would suggest that at best it hasn't failed but hasn't been proven correct either.

A no mans land of tied up capital with an "Opportunity cost".

Having said that you have a longer term outlook so will re visit in a month or so.

 

[brty]

Tech/a,

I like to see my analysis validated strongly and early

Agree 100%.

When I buy, I buy because analysis said 'going up', not 'going sideways and maybe up later'. When things go sideways it means my analysis is incorrect, therefore no further reason to be in the trade.
Of course some latitude must be given, but not a lot.

My research shows that going sideways, means market undecided and odds revert to 50/50 (or even less, depending on time going sideways) of a favourable outcome. In other words the longer sideways, the worse the likely outcome.

brty

 

[Client]

tech/a, brty,
You both have very righteous thoughts but the problem is to predict that "strong and early" movements. Especially talking about long term movements. If any of you teaches me the way I can tell where the price is going to be tomorrow exactly or even a month later, I will very appreciate that! And it would be nice if you gave a couple of examples like I do in this thread...

 

[tech/a]

tech/a, brty,
You both have very righteous thoughts but the problem is to predict that "strong and early" movements. Especially talking about long term movements. If any of you teaches me the way I can tell where the price is going to be tomorrow exactly or even a month later, I will very appreciate that! And it would be nice if you gave a couple of examples like I do in this thread...

I dont know that our comments are righteous.
Your not the only one who is grounded in Tech analysis and have opinions.
I agree you cannot predict any price movement but we can anticipate.
The analysis you use is what I would call conventional.
It also uses some lagging indicators and some dynamic (Elliot) which isnt definative and requires confirmation of further price action.

I'm happy to place a couple of trades here but my aim in THIS market is not to set myself for large chunks but rather 2-10R on very short term trades.
This market right now doesnt lend it self to longer term in my view. I have losses and wins---net Profit is the aim--works for me.

Client I dont have any problem with your analysis but you dont show how you would trade them.
Sure direction options but how you actually extract a $$ is not discussed.
IE
What you do when your right and what you do when your wrong.

But maybe I need to pay for that part of your "training"?

 

[brty]

Client,

but the problem is to predict that "strong and early" movements

I buy 'good support' that has been approached in the correct manner. What I buy generally either goes straight up or sideways. Sometimes it goes sideways for a few days then up. If it goes sideways for too long, then I'm out. I thought I already explained this.

The way Tech and I trade is probably almost opposite each other, but with common themes. It may sound confusing to you. The common themes involve a plan, trade management and a knowledge of exactly what to do no matter what the stock does.

Lots of lovely lines and different colours, indicators and averages have very little to do with trading.

Especially talking about long term movements. If any of you teaches me the way I can tell where the price is going to be tomorrow

Here is confusion. If you are interested in 'long term' then tomorrow does not matter. If you are interested in 'tomorrow' then long term does not matter.
Why use dailies if you are trading weeklies??

No-one can tell where the price will be tomorrow, just anticipate due to research that tells of a likely outcome and positioning for that outcome, plus an uncle point or a plan.

brty

 

[tech/a]

The way Tech and I trade is probably almost opposite each other,

Maybe not so opposite.