An ascending triangle forms when prices, in tracing their daily or monthly pattern, move up and down between support and resistance to form a “shape” that looks like a triangle or a pie wedge. The point or tip of this shape is on the right side of the pattern, as prices become compressed between support […]
There is an idea circulating that a stocks has to have 500K average volume in order to ‘safely’ invest in the stock. The idea stems from a desire to avoid getting whipsawed if selling starts; it takes fewer sellers to change the direction of a stocks with lower daily average volume. We basically use a […]
Looking at the current rally you can see that semiconductors and NASDAQ are not always linked. NASDAQ has put together and maintained its upside move even as SOX modestly bounced and then spent the past three weeks selling back down. NASDAQ itself is not just tech laden anymore. Other issues are benefiting from the decline […]
There is an old adage that all gaps must be filled. We know that a stock can’t run up (or even sell) without having to come back and test some support (or resistance). Often when this happens a stock or index will work to fill a gap on a normal consolidation of the gains. Ultimately […]
There are two points to the answer. Options are derivatives, meaning they derive their value from the underlying security. Thus their value in the most general sense is tied to the movement of the underlying security. There are other factors that come into play such as volatility, time until expiration, the security price in relation […]
You don’t have to wait to reinvest due to trades taking three days to clear. You can sell a stock and immediately buy another one using the ‘float’ to do it. This is a three day float on a stock transaction; option transactions clear in a day. As long as you don’t exceed your cash […]
Assuming that what you refer to is when a stock, while basing, moves up from the ‘bottom’ (consolidation) and begins to trend higher, forming the right side of the base. This occurs in patterns like a cup with handle, saucer, reverse head and shoulders, and even flat base when initially a stock reaches a high, […]
A cup with handle base roughly looks like a half circle open to the upside (the cup) and then a lateral and slightly lower ‘handle’ where the stock fades from the right lip of the cup (the fade is measured by the intraday lows). In rising markets this pattern has produced a lot of winners […]
The measure of up weeks to down weeks is basically tallying the number of weeks a stock or index rose on rising volume and the number it fell on rising volume. The idea is to get a rough idea of whether money is moving into a stock or out of a stock. Often when stocks […]
Shorting a stock is also called ‘selling short’. You are selling first, buying later. When you sell short, you are basically borrowing shares of a company and selling them at the current market price. Your plan is that the share price is going to fall. If they do fall, the shares can be bought back […]
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