Friday, January 19, 2007
Technical Indicators
Average True Range
(ATR)
Average True Range or ATR is a measurement of volatility. It
measures the average of true price ranges over time. The True Range is the
greatest distance between today's high to today's low, yesterday's close to
today's high, or yesterday's close to today's low. The Average True Range is a
moving average of the True Ranges.
High ATR values often occur at market bottoms following a "panic"
sell-off. Low Average True Range values are often found during extended
sideways movement, like as those found at market tops or after consolidation
periods. True Range is used in Welles Wilder's Directional Movement indicator
as well as Donald Mart's Master Trading Formula and is a common volatility
ratio. The ATR can be used in a channel breakout method of trading by adding or
subtracting from the previous bar's close or the current bar's open.
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Trading Education
Tutorial
Island Reversals
Stand Alone Formation Speaks Volumes
Reversals tend to occur slowly, with securities forming double
bottoms, higher lows, head and shoulders patterns, etc. before starting a new
trend. However, sometimes we see a dramatic reversal immediately, and one of
the best indications of these types of reversals is Island Tops and Bottoms.
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More...
NASDAQ Chart of the Day
VSEA
took a solid breakaway gap to the downside today on increased volume and has broken
a major lower trend line in the process. Watch for continued selling from this
stock below 44.00.
Daily Trading Signals
NYSE Chart of the Day
EDS took a large gap up today and eventually filled the gap to the
downside, forming the right shoulder of a bearish head-and-shoulders pattern.
Watch key support at 26.30, as a break through this zone could spark much more
selling.
Daily Trading Signals
Daily Market Commentary
Updated Thursday, 1/18 for Friday's market.
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Key DOW Levels for 1/19
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P
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Above 12,625
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DN
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Below 12,525
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Still Holding...
- Dow maintains stance at resistance, despite technology sell-off.
The index ended the day above near-term support at 12,540 and only managed a 9
point loss, despite the big decline in technology.
- The NASDAQ continues to look highly bearish after a big three-day sell-off,
which is beginning to take its toll on the broader market. Watch for more
selling ahead.
Summary
The Dow closed the day modestly lower today, but continues to hold at the
overall highs in a better-than-expected manner. However, if the index cannot
rise confidently above 12,600, it is very likely to sell-off from these highs.
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