Wednesday, November 01, 2006
Potentially profitable Short-Term Trading
Ideas
Long candidates:
NCR (NYSE: NCR, $41.14) -- NCR provides data warehousing and customer information
software. Stock was first spotted back on October 16th. At that point in time,
the shares were changing hands at $39.62. After the company reported earnings
on Thursday, October 26th, NCR dipped as low as $38.06. However, the stock
rallied back strongly on Friday, gaining nearly $2 per share despite weakness
in the tech sector. Target is $44.39. Exit the trade if NCR falls back
to $36.80, below a base formed near $37.
Short Candidates:
Foundry Networks (Nasdaq: FDRY, $12.57) -- Foundry manufacturers
routers and other switching devices used in Internet traffic management. The
shares bottomed at $8.98 in late July, and then hit a peak of $14.00 near the
end of September. FDRY has now broken an uptrend line in both price and
relative strength. MACD, stochastics and CCI are all on sell signals. RSI has
just broken below 50. Target is $11.05. Cover the short at $14.11,
just above the stock's September peak.
Trading Education
Tutorial
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.
Read More...
NYSE Chart of the Day
OSK
has broken a large triangle range to the downside via a solid breakaway gap and
high volume, which is quite bearish. Watch for steady weakness from this
pattern.
Daily Trading Signals
NASDAQ Chart of the Day
AMZN
is holding at major resistance at 38.85, which has held since April. Watch for weakness
away from this zone, unless a violation is seen.
Daily Trading Signals
Trading Education
Tutorial
Reward:Risk Ratio
Assessing
a Trades Potential
When looking at a stock to buy, we look to various tools and techniques to help
us assess the probability of its upward movement. However, will it go up is not
the only question to ask - we also need to analyze the chart to see how far it
is likely to go up and also how much of a loss we are willing to take to allow
it to reach it's profit potential. The potential profit of a trade divided by
the potential loss of trade is known as the Reward:Risk Ratio.
Read More...
Daily Market Commentary
Updated Tuesday, 10/31 for Wednesday's market.
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Key DOW Levels for 11/1
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UP
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Above 12,200
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DN
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Below 12,000
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Volatile Session...
- Dow trades in volatile manner, but ends session flat again. The
index each traded in full swings today, but continue to build out with major
technical patterns, which will play a huge role in early November movement.
Watch these patterns closely.
- The NASDAQ and S&P each traded in full swings today, but continue to
build out with major technical patterns, which will play a huge role in early
November movement. Watch these patterns closely.
Summary
The Dow ended the day with a nice rise from the afternoon lows. The index
continues to hold firmly above 12,000, which looks to be the key fulcrum in the
charts. A break or bounce off this level will likely determine the next medium
term move.
Read More...
