Tuesday, December 19, 2006
Technical Indicators
Keltner Channels
Keltner Channels are a volatility-based indicator that uses a pair
of values placed as an "envelope" around a data field. The values are
calculated by taking the Exponential Moving Average of the data for a given
period and adding or subtracting twice the average true range from the moving
average.
Envelope theory states that prices will most likely fall within the boundaries
of the envelope. If prices drift outside their envelope this may signify a
trading opportunity.
Keltner Channels are similar to Bollinger Bands and share many of their characteristics
but represent volatility using high and low, rather than the standard deviation
of the one field.
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Trading Education
Tutorial
Measured and Exhaustion Gaps
Identifiable Patterns After Confirmation Move
We have previously mentioned the three types of gaps that are of relevance to
investors - the breakaway gap, the measured (or continuation) gap, and the
exhaustion gap. We previously discussed the breakaway gap, but it is important
to discuss the measured gap and exhaustion gap at the same time. Why? Because
it is difficult to tell one from the other until after the fact.
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NASDAQ Chart of the Day
BWNG
continues to hold firmly at key resistance at 16.20, which has held for a
while. Watch this level for the next key break or bounce.
Daily Trading Signals
NYSE Chart of the Day
CRK
is turning away from major resistance at 34.00, which has held firmly since
late last year. Add to it that this stock is beginning to fill an exhaustion
gap to the downside and we could a very steep decline ahead.
Daily Trading Signals
Daily Market Commentary
Updated Monday, 12/18 for Tuesday's market.
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Key DOW Levels for 12/19
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P
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Above 12,500
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DN
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Below 12,275
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Pop and Drop...
- Dow hold gains after volatile session. The index closed the day
with a rather mild 4 point loss, but continues to wind up within a tight
consolidation range that could offer a big move ahead.
- The NASDAQ and S&P each sold off from the day's highs today, but the
tech-heavy index really took it to the extreme. Today's major weakness in the
NASDAQ could cause the other indexes to follow suit.
Summary
The Dow ended the day off by a hair after reversing sharply from the day's
highs. The index continues to build out a consolidation at the highs, but could
be on the verge a breakout. Watch this range closely tomorrow.
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