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$PSPW BarChart Trader's Cheat Sheet
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All Gaps will be Filled
There is an old saying that the market abhors a vacuum and all gaps will be filled. While this may have some merit for common and exhaustion gaps, holding positions waiting for breakout or runaway gaps to be filled can be devastating to your portfolio. Likewise, waiting to get on-board a trend by waiting for prices to fill a gap can cause you to miss the big move. Gaps are a significant technical development in price action and chart analysis, and should not be ignored. Japanese candlestick analysis is filled with patterns that rely on gaps to fulfill their objectives.
Daily Candlestick Chart for GORXQ
[img]stockcharts.com/c-sc/sc?s=GORXQ
$SRCH BarChart Trader's Cheat Sheet
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Daily Candlestick Chart for SHKZ
[img]stockcharts.com/c-sc/sc?s=SHKZ
$LNXGF BarChart Trader's Cheat Sheet
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Biflation: Biflation is a phenomenon where both inflation and deflation occur at the same time. This term was coined by Dr. Osborne Brown, a Senior Financial Analyst for the Phoenix Investment group.
During biflation, the prices of commodities and earnings-based assets (equities) rise while the prices of debt-based assets (bonds) fall
Amplification Mechanisms
Lately there has been a change in investor attitudes towards stocks. By the late 1990's stocks were considered a long-term investment that could not go wrong. Jeremy Siegel first published Stocks for the Long Run in 1994. Subsequent editions have appeared in 1998, 2002 and 2007. Stocks indeed performed well from 1995 until 2000, when the S
Daily Candlestick Chart for CRNJF
[img]stockcharts.com/c-sc/sc?s=CRNJF
$OTMN BarChart Trader's Cheat Sheet
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Carbon Credits: Carbon credits pertains to the right to emit a certain volume of greenhouse gases. The current measure is that one ton of C02 (or C02 equivalent gases) is equal to one carbon credit. To encourage businesses and companies to minimize their emission of greenhouse gases, they can exchange, buy, and sell carbon credits in the international market
Daily Candlestick Chart for AQOGF
[img]stockcharts.com/c-sc/sc?s=AQOGF
Dow Theory
There is also proof that one of the oldest systems around can outperform the market and reduce risk. Dow Theory seeks to buy when both the Dow Transports and the Dow Industrials record new reaction highs and sell or move into Treasuries when both record new reaction lows. The move out of stocks and into Treasuries greatly reduces risk because one is not exposed to riskier stocks. There have been a few big bad bear markets over the years and preserving capital is one of the keys to investment success.
Stephen Brown of New York University, William Goetzmann of Yale, and Alok Kumar of the University of Notre Dame published a study on Dow Theory in the Journal of Finance. The Dow theory system was tested against buy-and-hold for the period from 1929 to 1998. Over the 70-year period, the Dow theory system outperformed a buy-and-hold strategy by about 2% per year. In addition, the portfolio carried significantly less risk. If compared as risk-adjusted returns, the margin of outperformance would be even greater. Over the 18 years from 1980 to 1998, the Dow theory system has underperformed the market by about 2.6% per year. However, when adjusted for risk, the Dow theory system significantly outperformed buy-and-hold over this timeframe. Keep in mind that 18 years is not a long time in the history of the market and this period was during one of the greatest bull markets in history (1982 to 2000).
$JGBO BarChart Trader's Cheat Sheet
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Daily Candlestick Chart for GTRL
[img]stockcharts.com/c-sc/sc?s=GTRL
$BTHR BarChart Trader's Cheat Sheet
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EquiVolume Chart Volume Climax
EquiVolume boxes can be used to identify exceptionally high volume periods that represent a volume climax. A typical selling climax involves a new price low, an intraday plunge and a strong intraday recovery with good volume. An EquiVolume climax occurs with an exceptionally wide box. Often the box is wider than it is tall. This represents a period of relatively little price change with high volume, which shows indecision that can sometimes foreshadow a significant move.
Chart below shows Weatherford International (WFT) finding support in the 9-10 area from mid January to early March. An exceptionally wide EquiVolume box formed on February 25 to further reinforce support and act as a volume climax. The subsequent breakouts at 11 and 13 opened the door to an extended advance.
Chart below shows Akami Technologies (AKAM) with a big gap down and an exceptionally wide EquiVolume box that looks more like a square than a rectangle. This wide EquiVolume box acted as support in the 16-17 area. AKAM firmed for a few days and then gapped higher with good volume. After this short-term reversal and bounce, AKAM returned to the wide EquiVolume box and tested support here. Also notice that a falling channel formed. The stock successfully tested support and broke channel resistance with a breakout. Admittedly, the breakout lacked a wide EquiVolume box for confirmation, but held after a successful test at 10 in early October.
CFD: In finance, the term 'CFD' stands for Contract For Difference. This is a contract between two parties, typically described as "buyer" and "seller" to exchange the difference in value of a financial instrument between the time at which the contract is opened and the time it is closed. In effect CFDs are financial derivatives that allow traders to take advantage of prices moving up or prices moving down on underlying financial instruments and are often used to speculate on those markets
Daily Candlestick Chart for UYMG
[img]stockcharts.com/c-sc/sc?s=UYMG
$IMSC BarChart Trader's Cheat Sheet
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Open to Interpretation ~ Weaknesses of Technical Analysis
Furthering the bias argument is the fact that technical analysis is open to interpretation. Even though there are standards, many times two technicians will look at the same chart and paint two different scenarios or see different patterns. Both will be able to come up with logical support and resistance levels as well as key breaks to justify their position. While this can be frustrating, it should be pointed out that technical analysis is more like an art than a science, somewhat like economics. Is the cup half-empty or half-full? It is in the eye of the beholder.
Ascending Trend Channel: An ascending trend channel is a basic chart pattern used in technical analysis.
Ascending trend channels are a useful tool due to their ability to predict overall changes in trend. As long as prices remain within the ascending trend channel, the upward trend in price can be expected to continue. As soon as prices exceed either trendline forming the channel, however, a strong signal either to buy or to sell is generated. A break through the upper trendline generates a strong buy signal, while a break through the lower trendline generates a strong sell signal.
Daily Candlestick Chart for RTXB
[img]stockcharts.com/c-sc/sc?s=RTXB
$STEV BarChart Trader's Cheat Sheet
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Uptrend Line
An uptrend line has a positive slope and is formed by connecting two or more low points. The second low must be higher than the first for the line to have a positive slope. Uptrend lines act as support and indicate that net-demand (demand less supply) is increasing even as the price rises. A rising price combined with increasing demand is very bullish, and shows a strong determination on the part of the buyers. As long as prices remain above the trend line, the uptrend is considered solid and intact. A break below the uptrend line indicates that net-demand has weakened and a change in trend could be imminent.
Daily Candlestick Chart for MRFD
[img]stockcharts.com/c-sc/sc?s=MRFD
$NFDS BarChart Trader's Cheat Sheet
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Daily Candlestick Chart for GSTV
[img]stockcharts.com/c-sc/sc?s=GSTV
$SGCP BarChart Trader's Cheat Sheet
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Daily Candlestick Chart for ECRY
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$HRAL BarChart Trader's Cheat Sheet
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Chicago PMI: This report is created by The National Association of Purchasing Management. It rates the level of factory health in the upper Midwest. It is also known as the Business Barometer. Announced at the end of the month in The Chicago Report. Because it is released on the last day of the reporting month, it is used to predict the ISM Report. The Chicago PMI is based on a level of 50. Any level higher is considered expansion. Naturally, any level lower is a sign of contraction.
Daily Candlestick Chart for SMAA
[img]stockcharts.com/c-sc/sc?s=SMAA
$NWMT BarChart Trader's Cheat Sheet
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Breakaway Gaps
Breakaway gaps are the exciting ones. They occur when the price action is breaking out of their trading range or congestion area. To understand gaps, one has to understand the nature of congestion areas in the market. A congestion area is just a price range in which the market has traded for some period of time, usually a few weeks or so. The area near the top of the congestion area is usually resistance when approached from below. Likewise, the area near the bottom of the congestion area is support when approached from above. To break out of these areas requires market enthusiasm and, either, many more buyers than sellers for upside breakouts or more sellers than buyers for downside breakouts.
Volume will (should) pick up significantly, for not only the increased enthusiasm, but many are holding positions on the wrong side of the breakout and need to cover or sell them. It is better if the volume does not happen until the gap occurs. This means that the new change in market direction has a chance of continuing. The point of breakout now becomes the new support (if an upside breakout) or resistance (if a downside breakout). Don't fall into the trap of thinking this type of gap, if associated with good volume, will be filled soon. It might take a long time. Go with the fact that a new trend in the direction of the stock has taken place, and trade accordingly. Notice in the chart below how prices spent over 2 months without going lower than about 41. When they did, it was with increased volume and a downward breakaway gap.
A good confirmation for trading gaps is if they are associated with classic chart patterns. For example, if an ascending triangle suddenly has a breakout gap to the upside, this can be a much better trade than a breakaway gap without a good chart pattern associated with it. The chart below shows the normally bullish ascending triangle (flat top and rising, lower trend line) with a breakaway gap to the upside, as you would expect with an ascending triangle.
Daily Candlestick Chart for UNDT
[img]stockcharts.com/c-sc/sc?s=UNDT
Industrial Metals and Bonds
Not all commodities are created equal. In particular, oil is prone to supply shocks. Unrest in oil producing countries or regions usually causes oil prices to surge. A price rise due to a supply shock is negative for stocks, but a price rise due to rising demand can be positive for stocks. This is also true for industrial metals, which are less susceptible to these supply shocks. As a result, chartists can watch industrial metals prices for clues on the economy and the stock market. Rising prices reflect increasing demand and a healthy economy. Falling prices reflect decreasing demand and a weak economy. The chart below shows a clear positive relationship between industrial metals and the S
$IVFH BarChart Trader's Cheat Sheet
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Investor Hub Alerts: Sign up for 'STOCKGOODIES PLAYS OF THE WEEK ' E-Mail List UPDATE; 5-1-22 courtesy of charting /\ wit tweezer top calls /\ Tony @Montana_Trades Really good study sheet on Candlestick Patterns [-chart]pbs.twimg.com/media/FRn8188XMAAdZvk?format=jpg&name=small[/chart]
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