Education Center
Many of your readers, myself included, do not yet do options, covered calls etc. When you say that a stock “looks to test the 50 day MVA at ‘x’ and that you will sell calls on the pullback and buy them back when the stock hits the 50 day MVA and bounces,” are you telling those of us who do only stocks to sell them and buy them back when they hit the 50 day MVA, or to just sit through these growing pains and not sell, but to keep the stock, since you feel it might keep on going higher?
One of the great things about long term holds that are performing well is that we can ride them down to support levels, particularly after they have made a strong move up the short term moving averages and need to come back and test the 50 day MVA. Even strong stocks adhere to this pattern. […]
Please explain more about the ECRI as a forecaster. Do we have access to these figures and their interpretation?
The Economic Cycle Research Institute puts out a weekly gauge of leading economic indicators and also calculates a 6-month leading indicator as well as an inflation indicator. There is a website at http://businesscycle.com. Not all of the information provided is free. You can get historical data free, but not the current data. The ECRI has […]
When you list a stock in your newsletter, and a buy point, and it doesn’t meet it in the first week, do you continue to watch it, and if it hits that buy point say a month later, then do you still buy it?
We always continue to watch stocks that have been in the reports even if they do not hit the buy points. Many times a stock will be in a base and looks close to breaking out, but needs more time. As long as the pattern holds, we will continue to look at the same buy […]
You often mention trading channels and I know you use TC2000 for charting. Could you share your settings for these channels? (envelope channels in TC?) And, do you ever use Bollinger Bands?
The channels we discuss are not generated by any charting service tools. What we are doing on these and what we teach in the online seminars is to draw a trendline for the stock or index. It could be an up trendline or a down trendline depending upon which way the stock or index is […]
Can you explain the advantage of and what exactly is a covered call and how to do it?
A covered call is where you sell a call option on a share of stock you own. What you are doing is selling the right to buy your stock at a specified price (the strike price) to someone else. Sounds pretty crazy at first, especially if you want to hang onto your stock. However, as […]
You have been referring to the small and mid-cap indexes frequently lately. What are the ticker symbols for them?
Predominantly we look at the S&P 600 (small cap) and S&P 400 (mid-cap) to get a look at what these stocks are doing. The S&P 600 ticker is $SML. The S&P 400 is $MID.
On your comments on SGI (The Daily, 4-1-02), you state it pulled back on higher volume to close with a doji. I thought we want to see the pull back on lighter volume? Is it the fact that it closed on a doji that the higher volume is good on this pull back?
Yes, you are correct on the general idea that pullbacks on higher volume are usually not a good thing. The reason SGI was more appealing Monday night is that it pulled back on low, below average volume the prior week, but the past two sessions it is trying to find support at the 18 day […]
I would like to know if you still consider a stock a buy if you miss the buy point on a gap up but the stock pulls back to the point during the day.
From your question I assume the point the stock pulls back to is the buy point. There is a reason we picked the buy point; usually it represents a break over resistance. When resistance is broken it is ‘soft’ support, i.e., it should hold as support on a test lower. It does not become ‘hard’ […]
Can you explain the term “DELTA”?
Delta is the measure of how much an option price changes for every move up or down in the underlying security. A delta of 1.0 means that for each $1 move in the underlying stock, the option moves $1 as well. A delta of 0.50 means for every $1 move, the option moves $0.50 in […]
Can you please tell me what web site I can go to that will tell me the volume & A/D line during the trading day on the NYSE and Nasdaq?
On the web you can get very current data on volume and advancers versus decliners at http://quote.yahoo.com/mo.
