Friday, August 17, 2007
Technical Indicators
Standard
Error Bands
Created by Jon Anderson,
Standard Error Bands are two moving averages based on standard error levels
above and below the Linear Regression Indicator. As a type of envelope, they
are similar in appearance to Bollinger Bands but are calculated and interpreted
quite differently. While Bollinger Bands are plotted at standard deviation
levels above and below a moving average, Standard Error Bands are plotted at
standard error levels above and below the linear regression plot.
Andersen recommends
default values of "21" for the number of periods, a 3-day simple
moving average for the smoothing, and "2" standard errors. He also
notes that very short time frames tend to produce unreliable results.
Because the spacing
between Standard Error Bands is based on the Standard Error of the security,
when the two bands are close together, it signifies a strong trend. When the
two bands are far apart, prices are more volatile and will tend to fluctuate
between the two bands. If the bands are close and then begin to widen, it may
signify that the trend is weakening and may possibly be due for a reversal...
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PROFIT TAKING
Psychologist, Dr. Daniel Kahneman (The Nobel
prize in economics - the field of behavioral economics) basically shows that
investors are irrational, but predictably irrational. They continue to make the
same mistakes over and over. One of the biggest is a common inability to take a
loss: taking a loss is so painful, it is simply avoided.
A trader's most valuable commodity is trading capital. What is the most
important rule for a trader? Preserve your capital. This is what keeps a trader
in the game, and it is foolish to do anything that will jeopardize it.
Subsequently, to preserve a trader's capital, there are rules that help a
trader, whether in short, intermediate or long term play.
The rules listed below are suggestions. Only the trader can decide which rule
is important. However, when a trader decides on a set of rules, they should be
used consistently. Rules make up a trader's system and are enforced by
discipline.
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Trading Education
Tutorial
Courtesy of
Nirvana Systems
Support and Resistance Levels
History Tells Us When Securites are Overbought or Oversold
Support indicates a level on the chart where we can
expect an increase in the demand for a security (buyers take over). How do we
know this? By identifying this reaction to this price level in the chart's
history.
Read
More...
NASDAQ Chart of the
Day
Courtesy
of Nirvana Systems
SYNA has trended steadily higher
above a clear lower trend line since March, which is very bullish. Today's
reversal off this lower line at 36.00 could make for another run at new highs.
Watch 38.00 for signs of more strength ahead.
Daily Trading Signals
NYSE Chart of the Day
Courtesy
of Nirvana Systems
EFX formed a clear reversal bar off
major support at 36.00, which has held firmly since last October. This pinpoint
reversal at this precise support level indicates we could see a nice bounce
higher, especially if 38.00 is cleared. Continue to watch 36.00 as support.
Daily Trading Signals
Daily Market Commentary
Courtesy of
Nirvana Systems
Updated Thursday, 8/16 for Friday's market.
|
Key DOW Levels for 8/17
|
|
UP
|
None
|
|
DN
|
Below 12,500
|
Wild Session...
- Dow drops throughout morning, but rallies strong
into the Close. The index covered a lot of ground today, but eventually closed
with a relatively mild 16 point loss, but more swings are likely ahead.
- The NASDAQ and S&P closed the day with late-day rallies after selling off
most of the morning. Today's 'higher low and go' pattern indicates we could see
a more of a push higher soon.
Summary
The Dow closed the day with a heavy rally that nearly erased the mid-day 325
point decline. The Dow may see another run at 13,200 for another key test of
this zone. Watch 12,900 for direction.
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