Invest and Trade Profitably with Jon Johnson

Education Center

I know that you guys watch the 200 SMA, but do you pay attention to the 200 EMA as well? It seems to me that many a move hits resistance or holds support at this level.

August 30, 2000

For a review, we use the exponential moving averages in the 10, 18, and 50 day MVA and the simple on the 200 day MVA. The reason we do that is the accuracy. The exponential averages tend to work best on the shorter term averages. We use the 200 day simple MVA because institutions tend […]

When you place a buy price for a stock, do you place a buy limit so when it hits that price its executed or do you wait till it closes at that price?

August 30, 2000

Yes. Actually, sometimes we do one, sometimes the other, and other times both. On breakout plays we like to set a buy stop at our buy point and let the stock move up through resistance and trigger the buy. Many times we will do this on part of a position, particularly if we think the […]

When you speak of volume . . . do you mean wait until the intraday volume has reached [the specified] level? Or, do you mean by looking at the current intraday volume you would think it would hit that number for the day? For example, the 50 DMA volume for IPIC is about 288,000, today’s trade volume was about 433,000. I would think if I wait to see that it hits 362,000 it may be extended by that time.

August 30, 2000

Many times when a stock is making the move we want early in the session, you are right; if we wait, it may be up $4 by the time the volume hits the target level. What we do is look at where it is now and if there are block trades taking place. If volume […]

Why are ‘negative views by option players a positive for the market?’

August 30, 2000

That was a line taken from Wednesday’s market summary. To be more precise, it should have read ‘negative views by options players as a whole are a positive for the market.’ The reason is that options players as a whole are speculators. In other words, they buy out of the money near term (current month) […]

Can you please explain what takes place in the last 45 minutes that unleashes all the buying activity so often?

August 30, 2000

Most of the action takes place in the first and last hours. Why? Usually the early hour is dominated by retail investors that put in orders the night before, and to a much greater extent institutions with buy orders that are either buying equities or selling them based on fair value in the futures. The […]

Under what conditions do you trade in the first hour? How long do you give the market before you jump in if you trade in the first hour? …if market is opening up?…if opening down?… Do you respond differently depending on the direction of the market?

August 30, 2000

One of the age old dilemmas. You see the market open and stocks are running early. Do you get in right away and risk a stock tanking on you or do you wait and potentially miss a good move? Basically, if an index jumps over resistance, tests it and then moves back up, we will […]

Continuing our discussion of indicators, such as VIX and VXN, as well as what support and resistance are.

August 30, 2000

The VIX and VXN are measures of volatility of the market by looking at hypothetical at the money options on the S&P 100 and Nasdaq 100, respectively. Options have as one of their pricing components volatility. There are a few ways to calculate it, but in short it is nothing more than a measure of […]

Where on the web can one find information on futures both at night and in the morning before the market opens?

August 30, 2000

There are a few places to check it out, but CNNFN is not bad. Try this link:Before hours: http://money.cnn.com/markets/morning_call/After hours: http://money.cnn.com/markets/afterhours/

Why does the elimination of the 30 year bond free up money for consumers?

August 30, 2000

One of the problems with mortgage rates not falling (the yield curve too steep) is that the long bond was not falling along with the 10 year treasury. By eliminating the 30 year (the U.S. has done this two other times) as a form of treasury funding, the long end represented by the 30 year […]

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