Education Center
My question is regarding short interest in a stock. KKD has a huge short interest (I think around 20%). How do you look at this with respect to a stock? It seems like it would be a contrarian indicator with that many shorts to cover.
One of the indicators we keep an eye on in the market is the short interest on the NYSE and other indexes. Yes, it acts as a contrary indicator; when it gets to high or extreme levels it can be a signal of excessive fear in the market: a lot of investors are betting it […]
I would like to know when do you know what the breakout point is, and at what point do you buy.
When we refer to a breakout, we are talking about a stock price exceeding a certain level within a chart pattern. The pivot point is another term for the breakout point. That is the point we want to buy. When a stock forms a technical pattern such as a cup, it “breaks out” of the […]
What is meant by “Double Bottom Recession Ahead”?
A double bottom recession is where the economy picks up and then drops back down again before climbing out one last time to recovery. This frequently happens and is something that Greenspan is worried about and knows could happen. That is why he said no stimulus package was needed now but could be needed; if […]
You have written about ‘even trades.’ What are those?
In a choppy market it is easier to get whipsawed as stocks move up and down. And in any market condition you can have some great trades and get hammered on one that gaps down on you past your stop point and just does not come back. One of the things we did when we […]
How many active positions at one time should I have?
That is a hard question to answer because there are many variables, the most important being do you have time to track and monitor what is going on. One of the problems less experienced and experienced investors alike have is too many outstanding investments that cannot be monitored properly: where should you sell, where put […]
Everyone I know keeps saying that we will not go down to the September lows again (or lower). Why not? Seems almost a sure thing since no one believes it ………the perfect trap!!!
That is usually the case isn’t it? It is often the case that when everyone decides something has to be, it never comes about. Now I can give you some reasons why I do not think it will head back down to the lows (at least not all of the indexes), but as investors, all […]
Is extreme hi VIX bullish? Is a high put/call ratio bullish? I know they are but lately this got to be confusing when I read other commentaries.
Yes you have them correct. The VIX is something that is a little harder to get a fix on. It moves inversely with prices. It measures volatility components on S&P 100 options. The higher the volatility, the more fear in the market and the higher the VIX reading. That usually happens at extreme selling levels. […]
Can you please explain how you place trailing stop losses once a play moves into the money, both for stocks and for options?
When a stock runs into the money we will move up our stop losses to protect our gains the best we can. When it first starts to move up and makes a good move off of the support or resistance level that we are playing, we move the stop up to just below that point. […]
Hello. I really enjoy your newsletter. It has been very helpful. It appears from your writings that “ascending wedges” are good chart patterns to go long on once they breakout. I attended a class [and was taught] that in any wedge, draw the two lines that form the wedge and watch that the “flat line usually wins”. In many ascending wedges, this is often the top line (the lows are rising faster than the highs), and the pattern eventually breaks down, not up. Do you agree with this, disagree? What are your thoughts on ascending wedges?
We are glad that the newsletters are of help to you. Ascending wedges can lead to some explosive breakouts, and this is especially true when the market is making bullish moves. They can form over a short period (couple of weeks) or over months. Clearly, it is a more bullish pattern in an overall stronger […]
When you have a support level in mind for a stock, is this set in stone on executing a sell if it hits intraday or only if it closes at or beneath that level? Case in point: SYMC [Wednesday]. Hoping for a hold of 74 but it did fall below before recovering. I did not sell when hit intraday but had in mind to, if it closed below.
SYMC is a pre-split stock that has been on a nice run heading into its split this week, combining the momentum of a pre-split with a good 50 day MVA bounce for a $10 move. It showed some action Tuesday and Wednesday that often chases us out of pre-splits after they have made a good […]
