Monday, May 21, 2007
Technical Indicators
Stochastic Oscillator
The Stochastic Oscillator compares the closing price of a security to its price
range over a given time period. Its displayed by two lines, a main line called
%K (drawn in solid blue) and a secondary line (in dotted green) called %D. The
%D line is the moving average of the %K.
The Stochastic Oscillator contains four variables:
· %K Periods:
This is the number of time periods used in the stochastic
calculation.
· %K Slowing Periods:
This value controls the internal smoothing of %K. A value of 1 is
considered a fast stochastic while a value of 3 is considered a slow
stochastic.
· %D Periods:
This is the number of time periods used when calculating the
moving average of %K.
· %D Method:
The method (Exponential, Simple, Time Series, Triangular,
Variable, or Weighted) used to calculate %D
When trading using the Stochastic Oscillator, one method is to buy when either
%K or %D falls below 20 and then rises back above that level. Similarlily, sell
when the either line rises above 80 and then falls back below. Another pattern
to look for when timing trades is buy when the %K line rises above the %D line
or sell when the %K line falls below the %D line. Lastly, one should always be
on the lookout for diveregnces. For example, if prices are making a series of
new highs and the Stochastic Oscillator fails to surpass its previous highs,
the indicator typically will provide the clue as to where prices will soon
head...
Read More...
Trading Education
Tutorial
Courtesy of
Nirvana Systems
Triangles
Tightening Price Action Leads to a Breakout
There are various forms of consolidation and they occur anytime
there is an equilibrium of buyers and sellers. One of the most predictive
consolidation formations is the triangle.
Read More...
NASDAQ Chart of the Day
Courtesy
of Nirvana Systems
GOOG
is winding up within a large triangle range that has a backend of about 75
points, which means a breakout could spark a move of about the same distance.
Watch 490 and 455 for signs that a big breakout could occur.
Daily Trading Signals
NYSE Chart of the Day
Courtesy
of Nirvana Systems
KND
is forming a large head-and-shoulders pattern that could make for big selling ahead.
Watch the neck line of the pattern at 31.50 for a break that could lead back
toward the 25.00 zone.
Daily Trading Signals
Daily Market Commentary
Courtesy of
Nirvana Systems
Updated Friday, 5/18 for Monday's market.
|
Key DOW Levels for 5/21
|
|
UP
|
Above 13,600
|
|
DN
|
Below 13,400
|
Steady Strength...
- Dow rallies at Open, holds gains to the Close. The index remains
highly bullish and will likely continue this trend until the lower trend line
is violated.
- The NASDAQ and S&P each pushed to new highs today after holding opening
gains throughout the day. Look for more overall strength, but keep an eye on
near-term support for early selling potential.
Summary
The Dow closed the day at the highs of the session, as the index continues to
chug along, setting new highs every day. The index remains above the steep
lower trend line, which we will watch for the first signs of potential selling
pressure.
Read More...
