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Leading Stocks Forecasted Today’s Sell-Off

Companies / Company Chart Analysis Oct 19, 2010 - 03:20 PM GMT

By: David_Grandey

Companies

Best Financial Markets Analysis ArticleWhen looking at the following chart, we see the classic “Nice uptrend, puts in a double top, then gets rolled to the downside” bearish pattern.


But what’s most interesting is that this same pattern showed itself in many leading stocks a couple of weeks ago. And when leading stocks start to fall, it usually means the rest of the market isn’t far behind.

Even when the market was up nicely Monday, most leading stocks were down. This is negative divergence. All the market needed was a catalyst and it got that today courtesy of AAPL and Bank Of America.

Now let’s take a look at the charts of some leading stocks:

MELI

A nice uptrend, then forms a double top and starts selling off more than two weeks ago.

CRM

3 weeks ago, this issue formed a double top as part of a bearish head and shoulders pattern, then sells off. After selling off, attempts to rally back but only up to the bottom of its prior uptrend channel. This is what we call a Kiss Of Death Retracement pattern — when an issue breaks an uptrend to the downside then comes back to kiss it from underneath only to fall there after.

AKAM

Same as CRM, starting looking bearish three weeks ago, sold off while the indexes kept going up, then formed a bearish channel as it attempted to recover.

What’s interesting to note is that these issues starting selling off aggressively all the while the indexes kept rallying. That’s why we say: “It’s A Market Of Stocks And Not A Stock Market”.

Before you buy the car, you have to look under the hood. The same goes with the market — all that matters is what leading stocks are telling you.

And success in the market comes from learning the patterns and knowing how to trade them. That’s where All About Trends comes in.

The 3 Things You Need To Know

  1. Uptrends and how to trade them
  2. Downtrends and how to trade them
  3. Changes In Trends and how to identify them.
A stock can only do 3 things — go up, go down or do nothing. For us, a company is only as good as its stock and its chart.

So we don’t worry about a company’s story or what an analyst thinks about it or what we heard about it on TV. All that matters to us is what’s happening on its chart. Because that’s how you make money in the stock market.

By David Grandey

www.allabouttrends.net

To learn more, sign up for our free newsletter and receive our free report -- "How To Outperform 90% Of Wall Street With Just $500 A Week."

David Grandey is the founder of All About Trends, an email newsletter service revealing stocks in ideal set-ups offering potential significant short-term gains. A successful canslim-based stock market investor for the past 10 years, he has worked for Meriwest Credit Union Silicon Valley Bank, helping to establish brand awareness and credibility through feature editorial coverage in leading national and local news media.

© 2010 Copyright  David Grandey- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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