All Entries Tagged With: "Reversals"
Every Day’s a Monday in Trading
May 17, 2010 at 9:06 pm
We all love a fresh start, am I right? Sometimes we just need that new beginning. Like a Monday morning diet when we’ve pigged out all weekend.
Or the opening bell after a tough stretch of trading. Both the Monday morning (for the dieter) and the opening bell (for the struggling trader) bring hope for change, so they’re quite similar. The big difference is that as a trader, we don’t have excuses to wait until next week to start taking control.
In my own personal trading, I’ve learned to make some adjustments when conditions call for it, because that’s what’s needed for different results than the frustration that only trading a single style can bring. Building your skill set takes time, but you can improve every day and experience the fresh start of a Monday whenever you want it.
This clip was also posted over on the Trading Videos site (as always), and perhaps you’ve seen it there – but in case you didn’t, I wanted to put it here on the blog for you.
Let me highly suggest clicking the “HD” on the video player and then going full-screen for best quality.
Thanks for stopping by and I’ll see you here soon with more.
Until then… Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
Bearish Engulfing Bars Warrant Caution
October 21, 2009 at 9:35 pm
Following gains of more than 7% in just a dozen days, today we saw the market averages tag new recovery highs and then reverse sharply to finish in the red. The bearish engulfing bars which resulted on the daily charts aren’t pretty, especially given the elevated volume which accompanied them.
It hints that this market is finally showing us a little fatigue, and that perhaps more than a few buyers morphed into sellers – at least for today.
If we did see a pullback begin to develop here, it wouldn’t at all be an unhealthy thing. Several dips have occurred since the March lows were set, with each of them being bought. Now, at some point that is going to change – it’s imperative to understand that – but we don’t yet have enough technical evidence to jump to conclusions at this point for anything but the next few days. And on that note, caution is warranted after today’s action.
Just a little while ago over on the trading videos site, I posted the following video. In it, I discuss what took place today, and offer up a few levels on the downside we could see tested if Wednesday’s selling pressure sees follow through.
Let me highly suggest clicking the “HD” on the video player and then going full-screen for best quality.
Thanks for stopping by and I’ll see you here soon with more. Until then…
Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
Stack the Odds for Daytrading Success
September 3, 2009 at 5:04 pm
Trading is all about stacking the odds for success. Risks must be taken in order to get paid, but the key is gauging under which circumstances the potential reward really outweighs that risk.
I discussed taking risks in a recent post, and I felt that a follow-up and an example of what I was referring to was in order. Here it is.
Many of my trades are continuation plays. They can be great for offering situations which warrant putting some money on the line once clues of a continued move are present.
However, there are many opportunities on the intraday timeframe which are exhaustion/reversal kinds of setups.
Buy or sell programs, news, and just plain old momentum drive stocks far beyond the pain thresholds of traders, carrying price a considerable distance in one direction or the other. That opens the door for some recoil, and catching the turning point can be quite lucrative.
Stacking The Odds
Here in a moment, I’m going to show you exactly what I mean in a video, but first let me outline a few keys which combined to produce a great trade in this situation.
- Corresponding market action. With the indexes having a distinct possibility of a short-term turnaround, conditions were ripe for similar price action in individual stocks. This is a point I make over and over in the weekly index videos.
- Prior key level on the daily chart of this stock was being tested. A huge intraday move which carries price right to a previously important level on the daily chart will increase the odds for a quick recoil move.
- Intraday price action suggested the move was becoming exhausted. That indicated that a reversal could quickly develop in the stock.
Here’s a video explaining it. Select the HD option and go full-screen for best quality:
Stack multiple factors in your favor for a great trading situation. They’re worth waiting for!
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Reversal Characteristics & Candidates
August 25, 2009 at 12:30 am
Stocks can reverse suddenly or slowly. Sometimes it takes place in one big bar, and other times it’s a process that occurs over time.
Because there are differences in how downside reversals can happen, after running across a couple of reversal candidates in the charts, I wanted to share a couple here on the blog.
Uptrends will often times be followed by corrective action, which may pave the way for further upside down the road. But a reversal is often a longer-lasting change of direction, and that’s what I’d like to discuss in this post.
When looking for reversal candidates, the thing to watch for is a change of character. Something that’s different from previous dips and stands out as a potential shift in the stock. That might be a lower high, or it might be a sudden decline which proves to be much sharper and faster than previous pullbacks were.
Show & Tell
In the video below, I want to point out 2 stocks which might be undergoing reversals. That means there’s plenty more to prove before they can be considered to be in corrective mode (as opposed to merely a dip within their uptrends), but chart reading is always a work in progress. If the characteristics which we’re seeing now happen to change, then so should our expectation.
For now though, let’s take a look at what’s going on and see if these show us the necessary price moves to confirm what the charts of FUQI and RL may already be saying.
Here’s a video explaining it. Select the HD option and go full-screen for best quality:
Thanks for stopping by and I’ll see you here soon with more. Until then…
Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
Clues to Observe for a Market Correction
May 26, 2009 at 8:07 am
Is this market due for a correction?
That’s the million-dollar question right now for many, so why don’t we examine a few clues to watch for just in case. After all, there could be some hints provided by the market before the heavy selling hits – that is, if it’s coming.
Here are 3 technical considerations I’m going to be on the lookout for…
- Weak closes. These tend to signal that some distribution is taking place. We’re all familiar with the phrase “amateurs open the market and pro’s close it,” but I think there really is something to the way in which the market closes. If it’s limping across the finish line with any regularity, it’s usually a sign of at least some short-term fatigue and therefore ripe for some selling.
- Watch key support and resistance levels. If key resistance is turning the averages away or if support levels are breaking, that’s ample proof of some underlying selling. (I highlight these weekly in the Market View videos over at TheStockBandit.TV.)
- Watch for potential lower highs and/or lower lows to be created. While these may take some time to actually confirm, keeping tabs on stalling rallies and areas where bounces look to be failing is a telltale sign that the buyers aren’t in charge.
There are probably several more, but those are the ways I tend to gauge the underlying market strength and weakness. Some traders prefer to watch indicators or sentiment readings, but monitoring the price action and the character of market moves tends to provide enough clues for me.
One other thought… I do flip through several hundred individual stock charts nightly, and that also helps me gauge whether more stocks are acting strong, weak, or are just lethargic. It also helps me determine when to curb my buying. So if you don’t currently use a charting program that enables you to keep watch lists, make notes, and draw trend lines, then get one!
And you know, even if this market does end up correcting a bit, what would be so bad about that?
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
