Tuesday, January 23, 2007
Technical Indicators
Herrick Payoff Index
The Herrick Payoff Index determines the amount of money flowing
into or out of a futures contract by analyzing volume, price changes, and open
interest changes.
When the Herrick Payoff Index is above zero it shows that money is flowing into
the futures contract. When the Index is below zero it shows that money is
flowing out of the futures contract.
The value of each new day is combined with the value of the previous day using
a multiplying factor. Since this is a cumulative indicator the value at the
beginning of the data series is zero. The value will primarily increase and
decrease with the average price for each day, the amount regulated by the
trading volume, changes in the number of open contracts, and changes in the
average price.
The primary signal to watch for is a divergence from the price. If prices are
increasing and the indicator is decreasing, prices will typically correct to
confirm the indicator.
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Ultimate Trading Machine Live Webcast - January 23rd, 9PM
EST
Trading Education
Tutorial
Breakaway Gaps
Pressure Helps Identify Movers
Gaps occur when there is a dramatic change in market conditions.
They can occur at the beginning of a trading session (i.e. most NASDAQ stocks)
or even during the session itself. There are three types of gaps that are of
interest to us when we analyze charts: breakaway, measured (also known as
continuation) and exhaustion gaps. Today we will discuss the breakaway gap.
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More...
NASDAQ Chart of the Day
CENT
took a solid breakaway gap to the downside and through the bottom of a clear
consolidation. Look for more selling from this stock.
Daily Trading Signals
NYSE Chart of the Day
CME is at a cycle high within the boundaries of a clear, uptrending
channel. A downside push through 565.00 could send the stock back towards the
bottom of the channel, which could offer about 30 to 35 points.
Daily Trading Signals
Daily Market Commentary
Updated Monday, 1/22 for Tuesday's market.
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Key DOW Levels for 1/23
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P
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Above 12,600
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DN
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Below 12,450
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Big Sell-Off...
- Dow breaks below 12,525, drops steadily throughout morning. The
index later pulled back from the session's lows, but still closed the day off
by 88 points and could be headed lower still.
- The NASDAQ and S&P each sold off heavily with the tech-heavy index
leading the way via exhaustion gap. Look for each index to build out at the
lows ahead of the next move.
Summary
The Dow closed the day basically sideways, as the index traded nowhere after
the opening decline. Look for the index to build out the current consolidation
ahead of the next key breakout move.
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