Education Center
When an analyst upgrades or downgrades a stock, does his big money clients get advance notice?
This is one of the overlooked conflicts of interest. Surprising in this time of supposedly heightened scrutiny of all transactions. What has developed in recent years is the rise of the big name stock analyst in a particular sector. Each big brokerage house wants a few of them to get the name out there when […]
When you buy puts on a stock that is breaking down, can you sell short as well, using the buy point for puts as the point to sell short?
What we do in buying and selling options is based on the movement of the underlying stock. We always look for stocks in a good pattern that shows either accumulation (upside plays) or distribution (for downside plays); if the stock makes the move, buying or selling the right options will allow us to benefit from […]
You write that companies will be entering their “quiet time.” What exactly is “quiet time”? Is it required by law, and if so, for what purpose?
Quiet time is roughly two weeks before a company announces its earnings. During that period the company is not supposed to make any material statements regarding the coming earnings that are to be released. It is designed to help avoid undue volatility before the earnings announcement. That is why we see earnings warnings coming out […]
Why not use the exponential 20 day MVA versus the exponential 18 day MVA? I hear a lot of services speak about the power of the 20 day MVA, but the first time I have encountered the 18 day MVA is on your site. I have no disagreement on the power of the 50 day simple moving average and the 200 day simple moving average. But, I am curious as to how you decided on the 18 exponential moving average versus others such as the more widely touted 20 day exponential MVA.
One of the things we always do is watch our indicators of stock market action. Not just what they are saying about the market, but also whether what they are saying is worth anything. What I mean is we look to see if the indicator is helping forecast movements up or down. If we see […]
Where can I find option deltas on the web?
www.phlx.com Select the button on the home page labeled ‘Delta & Option Chain.’ You then have a choice of three formats. The middle choice includes the delta, but the other choices also provide a lot of information such as time value, intrinsic value, and days before expiration if you do not want to do any […]
When you select stocks are you viewing Daily, Weekly or Monthly Charts? A few months back I set up my charting service with 1 day, 2 day, 7 day and monthly charts. I have been taking the charts from the report and viewing them in each of the above charts. I notice that it paints a different picture. For instance looking at NWK on a daily chart I do not see anything that makes me excited about this stock (Probably because of my inexperience). But looking at a 7 day chart of the same stock I see a beautiful pattern forming. Also when I view the different time periods the moving average changes. On the 7 day chart NWK has not closed below the 10 day moving average. As a matter of fact it has been following the 10 day MVA and now seems as though it has come to a point where it must either break above or below the weekly charts 10 day MVA. How do you know when to you use the different time frames, or does it vary with different stocks?
Great questions. When we look at a chart for the first time, we back off and look at a daily chart for at least a year. If we need to see an even bigger picture, we take a look at 2-day or weekly. You are right; you can see things from a different perspective backing […]
When the market is positive and moving up, there have been any number of days when it opens with a fast upsurge or a gap open. Because of the strong open, there may be one or more (sometimes many) of the plays hit their buy targets in the first 5-30 minutes of the open. Of course, during that time it is often hard to gauge the market and certainly near impossible to tell if it is “opening enthusiasm'” or real buying power that is moving the stocks. What do you do in such cases?
This is a great question and one of the most difficult parts of investing. One thing we always, always try to instill (and it took awhile to learn) is not to get impatient. You see a stock hit the buy point early and start to run higher. The urge is to avoid missing out and […]
The VIX seems to be caught in a range between 22 and 30. Could you discuss the implications of it breaking this range either way? To the upside (i.e. above 30), do you anticipate that to be linked to a “major” sell-off, maybe lower than the September bottom? To the downside (i.e. below 22), would you see an important rally accompanying the break and where would you see the VIX heading for next “support”?
The VIX is a sentiment indicator, and as such, it gives the best readings at extremes. We refer to the ‘normal’ range from 20 to 30, very much what the VIX has been tracking in of late. At the low end it shows complacency, i.e., little volatility in option prices and that indicates little fear […]
What analysis did you perform to conclude the QQQ’s target at 34?
That was our form of good old technical analysis. What we look at and what we teach in the online seminars is how to look at the elements that make up support and resistance and build a picture on you chart that puts all of those elements together so you can see the sequence of […]
My question is concerning the relative strength of a stock. I have read that this is a good indicator for a stock, and that it should be 80 or above before you buy. Is this true? And what if the stock is below that, does that mean I shouldn’t buy it? I would also like to know if there is a formula for coming up with that number. If so, is it possible for you to explain it to me.
Relative strength is an important indicator, and typically we will want to see it strong (over 80 as published by Investor’s Business Daily). That indicates that the stock has performed beftter than 80 percent of the other stocks it is being compared to – for IBD, that would be all the other stocks in its […]
