Invest and Trade Profitably with Jon Johnson

Education Center

Do you use stochastics as a technical indicator?

August 30, 2000

Sometimes, but not often. Stochastics attempts to anticipate movements up and down in stocks. Stochastics uses a ‘fast’ stochastic line and a ‘slow’ stochastic line, and looking at when and where the two lines cross, an investor is supposedly able to anticipate if a stock is peaking or bottoming. The problem is, investors try to […]

How do you interpret the stochastics indicator?

August 30, 2000

Many investors look to various tools to help them gain an edge on the future direction of a stock. One such tool is stochastics which in theory is designed to give you a leading indicator of which way a stock is going. It is a computation that uses moving averages, i.e., historical data, to project […]

What do the suffixes -E, -A, -P on options chains mean? Why are they different prices for the same option?

August 30, 2000

Those suffixes tell you what exchange the option is trading on. When we get quotes from our brokers on option prices we ask them to find the best price available and route our order through that exchange. Doesn’t always happen. The prices vary because there is no mechanism in place that requires the exchanges to […]

How can you tell volume is increasing during the day?

August 30, 2000

Some days it is easy to tell-you check the volume and it is higher than average or the previous day’s volume. Often, however, a stock is making the move you want it to make after the first hour and volume is somewhere below where you want it. How do you tell if you should enter […]

How do you determine resistance and support levels?

August 30, 2000

This is a technical analysis question that is difficult to explain without several examples. I will, however, attempt to explain the basics. We will be conducting seminars later in the year, and one will be devoted primarily to technical analysis. Resistance and support levels are exactly what their names imply. Resistance is a price level […]

In discussing selling puts, you stated that the upside was limited. What did you mean?

August 30, 2000

When selling puts, if the stock moves above the strike price of the put sold, the stock will not be put to you. If you are playing to take the gain on the premium, that is the best possible scenario as the put you sold expires worthless. No one is going to put a stock […]

When you talk about moving averages, are you using the simple or exponential moving average?

August 30, 2000

Exponential moving averages place more weight upon the later moves in the time period than the earlier moves. We use exponential on our short-term moving averages (10 and 18) as we are using them as indicators for short term plays and want to see the latest trend in movement the best we can. For the […]

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