Best of the Week
Most Popular
1. Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - Nadeem_Walayat
2.Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - James Burgess
3.Gold Price Trend Analysis - - Nadeem_Walayatt
4.The Beginning of the End of the Dollar - Richard_Mills
5.Stock Market Trend Forecast Update - - Nadeem_Walayat
6.Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - Troy_Bombardia
7.Precious Metals Sector: It’s 2013 All Over Again - P_Radomski_CFA
8.Central Banks Have Gone Rogue, Putting Us All at Risk - Ellen_Brown
9.Gold Stocks Forced Capitulation - Zeal_LLC
10.The Post Bubble Market Contraction Thesis Receives Validation - Plunger
Last 7 days
United States Facing Climate Change Severe Water Stress - 10th Dec 18
Waiting for Gold Price to Erupt - 10th Dec 18
Stock Market Key Support Being Re-Tested - 10th Dec 18
May BrExit Deal Tory MP Votes Forecast, Betting Market Analysis - 10th Dec 18
Listen to What Gold is Telling You - 10th Dec 18
The Stock Market’s Long Term Outlook is Changing - 10th Dec 18
Palladium Shortages Expose Broken Futures Markets for Precious Metals - 9th Dec 18
Is an Inverted Yield Curve Bullish for Gold? - 9th Dec 18
Rising US Home Prices and Falling Sales - 8th Dec 18
Choosing Who the Autonomous Car Should Kill - 8th Dec 18
Stocks Selloff Boosting Gold - 8th Dec 18
Will Weak US Dollar Save Gold? - 7th Dec 18
This Is the End of Trump’s Economic Sugar High - 7th Dec 18
US Economy Will Deteriorate Over Next Half Year. What this Means for Stocks - 7th Dec 18
The Secret Weapon for Getting America 5G Ready - 7th Dec 18
These Oil Stocks Are a Ticking Time Bomb - 7th Dec 18
How Theresa May Put Britain on the Path Towards BrExit Civil War - 7th Dec 18
How easy is it to find a job in the UK iGaming industry? - 6th Dec 18
Curry's vs Jessops - Buying an Olympus TG-5 Tough Camera - 5th Dec 18
Yield Curve Harbinger of Stock Market Doom - 5th Dec 18
Stock Market Crashed While the Yield Curve Inverted - 5th Dec 18
Global Economic Outlook after Trump-Xi Trade War Timeout - 5th Dec 18
Stock Market Dow Plunge Following Fake US - China Trade War Truce - 5th Dec 18
Subverting BREXIT - British People vs Parliament Risks Revolution - 5th Dec 18
Profit from the Global Cannabis Boom by Investing in the Beverage Industry - 4th Dec 18
MP's Vote UK Government Behaving like a Dictatorship, in Contempt of Parliament - 4th Dec 18
Isn't It Amazing How The Fed Controls The Stock Market? - 4th Dec 18
Best Christmas LED String and Projector Lights for 2018 - Review - 4th Dec 18
The "Special 38" Markets You Should Trade ebook - 4th Dec 18
Subverting BrExit - AG Confirms May Backstop Deal Means UK Can NEVER LEAVE the EU! - 3rd Dec 18
The Bottled Water Bamboozle - 3rd Dec 18
Crude Oil After November’s Declines - 3rd Dec 18
Global Economic Perceptions Are Shifting - Asia China Markets Risks - 3rd Dec 18
Weekly Charts and Update on Equity Markets, FX Trades and Commodities - 3rd Dec 18
TICK TOCK, Counting Down to the Next Recession - 3rd Dec 18
Stock Market Key (Short-term) Support Holds - 3rd Dec 18
Stocks Bull Market Tops Are a Process - 3rd Dec 18
More Late-cycle Signs for the Stock Market and What’s Next - 3rd Dec 18
A Post-Powell View of USD, S&P 500 and Gold - 2nd Dec 18
Elliott Wave: SPX Decision Time Is Coming Soon - 2nd Dec 18
Junior Gold Stocks Q3’18 Fundamentals - 1st Dec 18
Little-Known BDC Stocks Thrive Amid Rising Rates and Earn Investors +7% Yields - 1st Dec 18
Ray Dalio: This Debt Cycle Will End Soon - 1st Dec 18
Bank of England Warns UK House Prices 30% BrExit Crash! - 1st Dec 18
Gold Fundamentals Improving but Not Bullish Yet - 30th Nov 18
What the Oil Short-sellers and OPEC Don’t Know about Peak Shale - 30th Nov 18
Global Economic Perceptions Are Shifting Imnplications for Stock Market - 30th Nov 18
The US Economy is Getting Worse. What this Means for Stocks - 30th Nov 18
Trailblazers Leading the Way in Online Reputation Management - 30th Nov 18
The Shift in Trend from Physical Printers to Online Printers - 30th Nov 18
UK House Prices 2019 No Deal BrExit 30% Crash Warning! - 30th Nov 18
Stocks Rallied, New Uptrend? - 29th Nov 18
The Fed Will Probably Stop Hiking Rates in 2019. What’s Next for Stocks - 29th Nov 18
Love. Fear. Inflation. A Precious Metals' Trifecta - 29th Nov 18
GBP/USD – Double Bottom or Further Declines? - 29th Nov 18
Stock Market Santa Rally Still a GO to Dow 27,000? - 29th Nov 18
UK Government and Bank of England BrExit Economic Armageddon Propaganda - 29th Nov 18
Why the Crude Oil Price Collapsed to $50 - 28th Nov 18
Gold Joins the Decline – the Earth is Shaking - 28th Nov 18
Watch This Picture As Asset Prices Fall - 28th Nov 18
GE’s Stock Price Crash Holds an Important Lesson About Investing - 28th Nov 18
5 Rules for Successful Trading - 28th Nov 18
Dollar Trend Imposes: EURUSD to Fall to 1.11 - 28th Nov 18
Gold, Original Money, Fiat Money - 28th Nov 18
When Will the Stocks Bull Market End? - 28th Nov 18
Looking ahead: Why the Smart Money is Investing in Green Energy - 28th Nov 18
The Yield Curve Will Invert Soon. What’s Next for the Stock Market - 27th Nov 18
Silver Trading and the Hands of a Broken Clock - 27th Nov 18
What's Inside SMIGGLE Christmas Advent Calender 2018 - 27th Nov 18
Investing in Recession Proof Trailer Parks - 27th Nov 18
The Advantages and Disadvantages of Debt Consolidation - 27th Nov 18
GDX, This Most-Hated Stock Could Return You 140% in Just a Few Months - 27th Nov 18

Market Oracle FREE Newsletter

How You Could Make £2,850 Per Month

Rising Stock Market Does Not Lift All Stocks

Companies / Company Chart Analysis Dec 08, 2013 - 10:41 AM GMT

By: Michael_Noonan

Companies

We advocate a proactive stance in managing one’s stock portfolio as the most prudent way to preserve and grow capital, by capturing gains and limiting risks. The days of buy and hold are finished, at this stage of a central bank propped-up market, fed by fiat and highly questionable reports issued by the Bureau of Lies, which seems an accurate assessment.

There are several charts to be shown, and where a picture may be worth 1,000 words, we can limit we say and defer to what the market has to say. After all, the market is the best source and always the final arbiter.


The trend is up. Price rallied strongly from a small reaction. The close was strong and volume increased. These are all positives. A note of caution comes from the lack of upside progress, an inability to rally above the small range high from the previous week.

There is a clustering of closes, and that can lead to continuation or a correction. Odds favor continuation, but we are mindful of the previous cluster in July. Of course, the weekly chart is not used for timing, so the daily chart comes next.

We like to see continuity, a story between the different time frames. There is a series of higher swing highs and higher swing lows, the easiest way to define an up trend. There was bullish spacing at the November swing low. The mid-November swing high was the same price as the next little swing low, so there was no spacing. This lets us know that the market reaction was relatively weaker, but within the context of being in an up trend.

Measuring the swing highs, at the left, confirms the lack of upside progress on the weekly chart, and when seen in more detail on the daily, the market is showing less ability to achieve greater net upside progress, another sign of a weakening of momentum. It does not mean the trend is changing, but just tiring. That could all change next week with a sharply higher market, for example. Just stay with the trend until there are greater signs of change.

If price fails to make new highs, next week, the note of caution would grow, and individual stock performance[s] should be addressed, relative to the index.

The Nas did make new highs, and continuation is expected for next week. The breakout high followed a clustering of closes, an example of how they led to more upside and not a correction. It is important to compare individual stock performance with this index to know how to respond to each stock’s development.

Examples follow.

On 17 November, we gave one way to use developing market activity for initiating new positions that provided an edge.  [See Markets Talk, Few Listen. Profit Is Only Objective]. It will review why each position was taken.  The same stocks are reviewed below.

This was what the chart looked like on 17 November.

Buying “right” is important to provide a market edge and give time in the trade. The first expectation is for continuation higher, or the trade gets reassessed, even sold, if initial results fail to go higher, relative to the overall market.

Whatever one’s rules are for managing positions, [ You do have rules, do you not?!], you can see there has been ample time to determine whether to hold, take partial profits, stand aside, raise stops. Your rules would determine your strategy. This was, and continues to be a good trade.

Relative to the overall market, TJX is not rallying in a similar fashion. This is a small red flag to monitor the position closely. As a previous leader, it should continue to lead or, if not, be cause for concern.

As of the time when this commentary appeared, SSYS was doing well.

Reversal of fortune? Buying with an edge gave time to monitor the red flag high that had a poor close. A single bar is not always determinative, but it should be respected if there is more follow through to the potential reversal.

Next day, there was continued downside on increased volume. We would have looked at an intra day chart to make a decision to stay or cut loose, but assuming the worst, one could have exited at the low of the day for at least a minimal gain. You can see how after the next 10 TD effort, price was still weak, and this is a stand aside to reduce risk exposure.

We noted the red flag high bar, similar to SSYS. This bar qualified as an OKR, [Outside Key Reversal - a higher high, lower low, and in this case, a lower close, not just from the previous day, but it erased the previous 4 TD activity]. [TD = Trading Day]

Unlike SSYS, there was no immediate downside follow through. Our message was, “Why stay with it?” That was due to a sideways move while the markets were still trending up. The motive was to reduce risk exposure, not maximize questionable profit potential

Reversal of fortune!

Assume a stand aside, there was little lost in the process. As it turned out, the reaction to the OKR was weak, very little give-back to the downside. What we know about weak reactions in a bull market is that they usually lead to higher prices. Using the same basis for taking a long position in mid-October, the pattern repeated itself and led to another buy the breakout opportunity.

This is a NAS component, and that index was holding well, giving additional insight into expectations for the buy set-up. We would view the last two bars as another red flag to watch the position closely relative to the overall market.

What we can take away from this is how to use pattern recognition, combined with some rules for engagement in order to take a position in the market that offers an edge. From the last commentary, DE was an example of what NOT to buy, even though there were many “investors” buying that stock, so there has been a variety of examples.

We recognize there are many other ways to get a market edge. This is to demonstrate how even just one kind of pattern set-up can lead to a profitable market experience. Why settle for less?

With an edge, you have time and opportunity in each trade to: control and minimize risk, monitor the position for taking partial profits, if warranted, and/or moving up stops to lock in profits should the market reverse. You have the individual stock performance and the relative overall index as another measure for how well, or not, each stock is doing.

Sounds like a plan, does it not? And one that works, based on market information and pattern recognition.

By Michael Noonan

http://edgetraderplus.com

Michael Noonan, mn@edgetraderplus.com, is a Chicago-based trader with over 30 years in the business. His sole approach to analysis is derived from developing market pattern behavior, found in the form of Price, Volume, and Time, and it is generated from the best source possible, the market itself.

© 2013 Copyright Michael Noonan - 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.

Michael Noonan Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules