Invest and Trade Profitably with Jon Johnson

Education Center

How do you choose your target prices? So many of them seem to be right on target, pardon the pun. That question seems to stump me every time. I have found many stocks setup to move but never know where to set my target price.

August 30, 2000

First we look at market conditions. Is the market uptrending or downtrending, is the trend strong or modest? If we are playing upside in an uptrending market ourtargets will be different from an upside play in an overall downtrend. In the latter case we will shorten our initial targets simply because good moves attract short […]

I have one technical question for you if you have the time. On several stocks, the candlesticks on the chart will have a small candlestick with a large extended wick. These are red in color. They are a gap up and then the price recedes. What is up with this candlestick and what does it mean and what action is usually required when this happens, buy, hold or sell?

August 30, 2000

The candlestick symbol to which you refer may mean a reversal if it is at the top of a run. The gap up, then recession from the high and lower close (long wick), means sellers pushed the stock back down but then buyers rallied it back up to the close and hence the smaller candlestick […]

Can you discuss how to distinguish between a double top and a consolidation? There are many stocks these days that look like they could be interpreted as either one of these formations.

August 30, 2000

A double top is a bearish pattern characterized by a stock’s or index’ move to a high then a move back down, followed by a second attempt at a high that fails, the second try usually occurring on lower volume. That is unhealthy price/volume action which typically can’t boost the stock over the previous high. […]

You always point out the delta when buying an option. Is it better to have a high delta or a low one?

August 30, 2000

An option delta measures approximately the change in the option price for every $1 change in the underlying stock price. For example, if a call option has a delta of 50 (it can also be shown as 0.50), for every $1 the underlying stock moves up or down, the option will move, all other things […]

Regarding 10, 18 & 50 day MVA. Why do you measure on this reference, with MVA’s, why not, 15, 23, and 55 MVA’s or 20, 28, & 60 MVA’s. Why does it have to be these particular days?

August 30, 2000

When looking at the market we learned the hard way to watch what the market was telling you and then react accordingly. No matter how smart I thought I was about the market and started feeling certain that something had to happen, the market always seemed to show me no, it did not have to […]

What is the best way to check if institutional buyers are getting involved in a stock?

August 30, 2000

As intitutions (mutual funds, pension funds, insurance companies) control 70% of the money that is invested in the market, they are typically involved in many of the issued traded on the larger exchanges. They typically move in stocks that trade in excess of 100K shares per day so they can move in and out or […]

Can the PUT option plays on the report also be used where one could go SHORT. Or, do you advise PUT and SHORT on a play or alert when that is the case? Next, several trailing stops were triggered last week. How does the alert service provide us with where a trailing stop should be set once an alert is triggered?

August 30, 2000

We prefer buying put options on downside plays because we know going into the play what our maximum risk is. In other words, the most we can lose on a put play is our investment in the option if it eventually expires without us selling it or exercising it. With a short sale if the […]

I look at after-market activity for the previous day and pre-market data before I start the new investing day. I see in a number of companies shares moving more than 20% up and down in post and pre-market action on ECN’s, usually with low volume. What is the best way to take part in Pre and Post Market activity?

August 30, 2000

Trading before and after the open and close has improved in the last four years with more efficient trading systems and better liquidity. Anything to help match up orders helps, and with more individuals participating it has helped liquidity. One of the problems with trading outside ‘normal’ hours is that there is no market maker; […]

How is Implied Volatility taken into consideration in your option plays?

August 30, 2000

Implied volatility is a component of option pricing along with the time until expiration, whether the option is in, at, our out of the money, etc. What implied volatility tries to do is assign a value to the assumed range of movement a stock might have during the life of the option. There are two […]

Can you please tell me where I can find information intraday to know if the institutions are on the selling side or buy side.

August 30, 2000

During any individual session there are several signals we look for to see if institutions are net buyers are sellers. The fundamental indication is whether the market overall is rising or falling on stronger volume. If volume is running stronger, then the market move has institutions behind it as they control over 70% of the […]

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