You ask a good question. In our technical analysis, we use candlestick charting, a Japanese method for plotting stock movements, as part of our analysis. One of the symbols in this kind of charting is a doji, where the open and closing price are in close proximity. It can occur at any time, but after […]
Upper channel lines tend to be very accurate predictors of pullbacks and bounces during solid uptrends and downtrends. They are plotted to help determine when a stock is ready to pull back after it’s been in an uptrend for several weeks or months, making them an important technical analysis tool in designating target prices as […]
Before buying specific stock and/or options positions, we always know first how much we want to invest. A partial position can mean one-half, one-third, etc., but in most situations we look at taking a whole or half position when we move into a stock or option. That does not mean we won’t invest more later […]
The stock price is the major influence on the underlying option’s movement, so typically we use the stock’s price to determine when we buy and sell. If a stock holds support, then that is good for the option because the stock typically rebounds from there and the option price does the same. Therefore, when the […]
We look at volume based on the last 50 days of trading because we have found that this provides an accurate picture of what institutions are doing with a stock. To determine this average, you can go to a site like BigCharts.com, key in to the Nasdaq chart and set it to either daily or […]
SOX – ticker for the semiconductor (chip) index All three of the following measure market volatility: VIX – The VIX, or volatility index, is a measure of the range of trading on S&P 500 options, a key measure of market expectations of near-term volatility conveyed by stock index option prices. It is a secondary indicator […]
The move within the channel of an uptrend is ‘normal’ in terms of that channel. Thus a move down to the up trendline that establishes the channel is not a correction. It is a pullback within the uptrend that holds the uptrend. If you are playing that trend, everything is more or less rosy. Of […]
In the most general sense it is typically not a good sign for a stock to announce a reverse stock split. What a company is doing is taking the outstanding number of shares and reducing them by converting say 4 shares into one share (a 1:4 reverse split). That immediately boosts the share price as […]
Stop loss and stop limit orders are designed to protect you when positions you own start to fail, but they are rather poor vehicles for doing that. If bad news comes out on a stock you own and it gaps below your stop point, you won’t be protected. With a stop loss you basically have […]
You are correct; typically partial positions comprise anywhere from one-third to one-half of what we plan to put into a position. The rest is taken at the next good buy point, e.g., on a move up after a lower-volume test of the breakout (if the initial buy was taken was on a breakout), or on […]
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