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FKLI and FCPO July 3 2009
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Lesson of the day
Markets need time to absorb instability generated by rapid price movement. They pause to catch their breath as both volume and price rate of change drop sharply. During these consolidation periods, new ranges undergo continuous testing for support and resistance. To the pattern reader, these appear as the familiar shapes of flags, pennants and triangles. Relatively simple mechanics underlie the formation of these continuation patterns. The orderly return to a market’s mean state sets the foundation for a new thrust in the same direction. Price pulls back with declining volume but does not violate any significant support. The primary trend reasserts itself as stability returns.
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FKLI and FCPO July 2 2009
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Lesson of the day
Moderate strength breakouts often set up good pullback trades. The uptrend terrain faces considerable obstacles marked by clear air pockets and congestion from prior downtrends. These barriers should force frequent dips that mark good buying opportunities. The swing trader must identify these profitable resistance zones in advance and be ready to act.
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FKLI and FCPO July 1 2009
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Lesson of the day
The appearance of a sharp breakout gap has tremendous buying power. But the swing trader must remain cautious if the move lacks heavy volume. Bursts of enthusiastic buying must draw wide attention that ignites further price expansion. The gap may fill quickly and trap the emotional longs when significant volume fails to appear. Non-gapping, high-volume surges provide a comfortable breakout floor similar to gaps. But support can be less dependable and force a stock to swing into a new range rather than rise quickly.
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FKLI and FCPO June 30 2009
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Lesson of the day
Always take a look back at the last range to estimate the expected price action for the new congestion. Trade more defensively if the prior pattern was both short and simple. Go on the offense after observing an extended battle in the last range.
Click Read More for today's market review.
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FKLI and FCPO June 29 2009
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Lesson of the day
Always face your true reasons for swing trading the markets. The primary motivation must be to aggressively take money out of someone else’s pocket. Rest assured, the skilled competition will do their best to take yours at every opportunity.
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FKLI and FCPO June 26 2009
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Lesson of the day
All markets cycle endlessly between contraction and expansion. But congestive phases use up many more price bars than trending moves. This suggests why making money in the markets can be so difficult. A trend may already be over by the time most participants see a sharp rally or selloff. At the least, risk escalates dramatically as advancing price can reverse or enter new congestion at any time. The swing trader tries to enter a low-risk position just before price bar expansion, whenever possible, and let the breakout crowd to push it into a quick profit.
Click Read More for today's market review.
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FKLI and FCPO June 25 2009
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Lesson of the day
Watch out for the tendency to see something that isn’t there. Detailed review through scanning or chart study often uncovers the basic elements of a successful setup but offers no attractive entry. Unfortunately, this analysis process can induce a form of secondary reinforcement. It relaxes, puts the brain into game theory mode, and soothes the ego that sees all those past setups that could have been entered with perfect hindsight. This unconscious enjoyment encourages the mind to fill in the missing pieces on questionable new patterns. Always exercise rigid self-discipline when asking the eyes to look for opportunity..
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FKLI and FCPO June 24 2009
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Lesson of the day
Measure the distance between the entry and the next barrier within the holding period for the trade. This points to the intended exit and reasonable profit target (PT). Measure the distance between the entry and the price that confirms that the setup was wrong. This points to the unintended exit and reasonable failure target (FT). Execute only those trades with high PT and low FT distance.
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When the Dow tumbles and Oil rises, demand factor is absent. There is no fundamental behind the rise, just mere Hedging and Speculation by irresponsible traders.
-- BursaTradingIdeas
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