Archive for TSV
Stock Market Technical Analysis – Head & Shoulders Top Alert
Posted by: | CommentsInteresting times in the US and global markets, no one seems to be sure where the markets are heading. News is mixed, and people are wary. So lets take a detailed look at the technical picture.
Here we use the Sp-500 as a base-line, however, the chart for the Dow Jones Industrials is very similar.
Chart Courtesy of Worden Brother Inc.
Chart Notes.
- This is a Weekly Chart 1 week = 1 bar
- Stretching from the end of 2008 we can see the March 2009 Bottom
- This scale enables us to view the Head & Shoulders Top that is currently forming
- H marks the Head.
- S marks the shoulders
- The Neck line is a clearly marked white line
- We see negative divergences in RSI & Time Segmented Volume
Technical analysts and professional traders use a specific way of measuring technical zones to which price may move, known as price targets.
With a head and shoulders top (or bottom) the distance between the neck line and the peak of the head (marked A) can be also used to attempt to measure where the downside target may be (also marked A) if the head and shoulders pattern completes.
How will we know if the head and shoulders pattern completes?
- Price will continue down and break through the neck line
- Volume will increase as price moves through the neck line
How will we know if this head and shoulders pattern is a fake?
- The price will not break down through the neck line and will proceed in a sideways consolidation
- The price may begin to move upwards towards the 200 week moving average (white dotted line)
Conclusion.
Today is looks like the Head and Shoulders formation will continue and complete, therefore leading to a significant downside to circa 880 – 900. However with the Federal Reserve making announcements today and the prospect of European Sovereign Debt defaults fading away, we may see a sideways consolidation, and observe confidence creeping back into the market.
Listen to what the market tells you through the technical and you will not go wrong.
Market Update – US Dow Jones DJ30
Posted by: | CommentsThis market “refuses to die”,
What a rally! No matter what the bad news is, disappointing jobless claims, Goldman Sachs fraud investigation or even volcanic ash over Europe, the Stock Market participants are in good spirits.
Now I am not a “perma” Bear, but now is a time to be a little careful. We have just kicked off earnings season and things are looking positive so far. But lets be clear about this, we need an amazing round of earning reports, including revenue growth, not just earnings growth due to companies cutting expenses by making more and more people redundant. Why do we need a great earning season? We need it just so we can maintain these levels in the Stock Market.
The last time I checked the Price Earning of the S&P500 was at 21. Historically, a P/E of the major US indexes has not been sustainable over 25. In 2000 we reached a PE of nearly 45 on the S&P500 and we all know what followed. So, I would not say the market is at a huge discount today. However, there are still plenty of bargains.
Technical Analysis of the Stock Market
As I has discussed many times in the lessons on RSI / TSV / ROC / Momentum, we need to look to divergences of the Price & Price / Volume indicators with price. I believe we have one such divergence occurring with the SP-500, DJ-30 and the NASDAQ Composite.
RSI Divergence DJ-30
Now I am not saying cash in your chips right now, the market is in a short / medium term uptrend. Simply be on maximum alert and keep your stop losses tight.
As Charles Dow said…
“A trend is in effect until it gives definite signals of a reversal”
We do not have a definite sign of reversal yet. We have simply some early warning signals.
Is the rally in the S&P500, DJ-30, Russell 3000, NASDAQ still alive?
Posted by: | CommentsWe can see over the last few days that the rally seems to be petering out in the US Stock Markets. It is always of great importance that we buy stocks as the market is about to rise, or in a continued uptrend. This allows us to maximize our profits and minimize our losses. To have a check on the future direction of the market it is helpful to compare and contrast the major indices to see if they are all still moving in the same direction or a few are flagging, see Dow Theory.
The graphic below compares the S&P 500 (SP-500), the Dow Jones Industrial’s (DJ-30), the Russell 3000 (RUA-X) and the Nasdaq Composite Index (COMPQX).
Chart Setup
Daily Bar – Candlesticks
- Moving Averages – 10 – 20 – 200
- RSI – Relative Strength Index 14, MA 14
- Time Segmented Volume 20 – MA14
Read More→
Chapter 9 – Chart Indicators – Volume
Posted by: | CommentsThis is an excerpt from the Liberated Stock Trader Academy Book and Training Course. Chapter 9, Section 2. This section covers everything you need to know about how to interpret Volume and Price Volume Indicators, such as Money Flow, On Balance Volume, Time Segmented Volume & Cumulative Moneystream.
The Price Volume Relationship
There are some important characteristics of volume and price in the market place.
Price Up–Volume Up (PUVU) Price moving up on increased volume. This is bullish as it shows us that more participants are interested in selling the stock at higher prices and that most importantly more people are interested in buying the stock at those higher prices. In an uptrend this signals the trend will continue, in a down trend this signals a possible correction or change in the trend’s short term direction to upwards.
Price Up-Volume Down (PUVD) in an uptrend this is very bearish as it suggests that although prices are rising there are fewer participants suggesting people are backing away from the higher prices. This also infers that the trend is weakening. In a down trend it suggests a continuance of the down trend.
Price Down–Volume Up (PDVU) in a down trend this may signal that a change in trend is likely, as we saw with the “Blow off bottom” there might be a huge selling climax, then the trend adjusts from down to sideways or down to up. In an uptrend this may indicate a crisis, panic selling or simply when a stock is going out of favor. The pressure is on the sell side and to sell they have to accept lower prices. A strong negative signal!
Price Down–Volume Down (PDVD) in a downtrend this can suggest that the retreat is slowing or beginning to end as there are fewer people interested in buying or selling the stock at these prices. In an uptrend this may indicate the stock is stopping for breath or due a pull back before continuing on its upward trajectory. Volume tends to trend in the same direction as the price trend, so PDVD also suggests a continuation of the main down trend, or a pull back and possible continuation of an uptrend. Read More→
