|
The contents on this page are a small sample of StockTradersHQ's member resources (FREE Trial!)
1.
Our staff of professional technical traders analyze 1,000's of potential stocks every day to provide you with a list of stock picks with the greatest potential for explosive gains.
2. These stockpicks are traded with our real-time portfolio. Email alerts are sent for every entry and exit. Through the member-only website, you will have our support every step of the way.
3. Our subscription service provides all the resources, stock picks and tools an investor needs to make very profitable, consistent trades while maximizing gains and minimizing losses.
SEE OUR TOP PICKS FOR 2006...
|
|
Sunday, May 15, 2005
Market Recap
The markets were mixed on Friday as there seemed to be a clear cut market wide rotation into the tech sector. The DOW, at one point in the day, was down over 100 points but manage to cut those losses in half during the last hour of trading. When it was all said and done, the DOW lost 49 points, the S&P lost 5 points and the NASDAQ gained 12 points. The NASDAQ looked very strong during the day, making a high of 1990, just 4 points below its 200 SMA. During the day, it crossed above its 50 SMA at 1983 but when met with this stubborn resistance area, it fell back to close below it at 1976. As you already know, the NASDAQ has lagged behind the DOW and S&P for many months now but lately it has shown surprising relative strength. So much that it now looks like the strongest index of the three and could possibly turn bullish with a close above its 200 SMA , only one good rally away. There has obviously been a big rotation into tech stocks in the last week or so. I am not ready to turn bullish on this index just yet because there is heavy resistance ahead, however, this strength cannot be ignored. For this reason, we have been taking some long positions in some stronger NASDAQ stocks while shorting some of the cyclical names on the NYSE.
Volume, the Most Important Indicator
Last week I showed charts of all of our open short positions, updated you on the status of the charts, and explained in-depth the reasons why I was still holding them. Every chart I showed had a common theme; they all had light volume rallies when they bounced. The light volume did not worry me and was one of the key reasons why I held my positions. All of these positions, with the exception of FFIV, succumbed to selling pressure last week and as a result, we went from being down 10% to locking in gains of 10% instead. Volume is such an important indicator that it deserves a full commentary of its own so we will do that tonight.
Follow the Money
Volume is the difference between stocks that perform with the market and stocks that out perform by a wide margin. Trading volume in relation to stock price action indicates whether a stock is being accumulated or distributed. Days when a stock moves strongly one way or the other within its basing pattern, can help to identify which stocks are being heavily accumulated or distributed. Stocks with the heaviest accumulation are the ones that I want to focus on. This is because I want to be with the “smart money” and if they are accumulating, there is a very good chance that the stock will go up drastically at some point in time. Big volume on a strong up day is an indication that one or more major institutional players are buying the stock. This is what is referred to as "moving into strong hands.” We should “follow the money” and volume is our signal.
Accumulation or Distribution?
A stock will normally form a base when being quietly accumulated or distributed. In that base, you can see if the stock is being accumulated or distributed by volume. If the stock were being accumulated, you would see higher volume on up days and lower volume on down days. Vice versa for distribution action, smart money quietly unloading shares. If you check the stock once a week or once a month, you may think that the stock is going nowhere because it has not moved in price however, it is forming a base and that is healthy as it gets the impatient speculators out of the stock on down days and strong hands into it on up days. Then one day, the stock breaks out of the base on above average volume and it is on its way. It takes time for the institutions to accumulate because if they bought it all at once, the price would sky rocket and they do not want to pay up for the stock. Instead, they steal the shares by testing the patience of the main street investor.
Distribution, a Clue to Short
These positive volume clues should lead you to the stocks that the smart money is accumulating. These same clues can also steer you clear of the stocks that they are unloading. We do not want to be long with any stocks that are under distribution. These stocks are about to fall of a cliff and we want no part of owning them. However, we can use this volume distribution signal to take a short position in the stock. If the big boys do not want to own it, then I can conclude that the stock must eventually go down. I check for the volume on down days and it will be heavier than the volume on up days. Many of our current short positions were taken because of this distribution factor. A lot of these stocks were market leaders just a few months ago, reaching 52 week highs. At the beginning of a leading stock's correction, it is normal for volume to increase as the stock sells off, but the real clues come in during the recovery stages. As the stock begins to recover from the initial sell off, check the volume. If it is light, then we have the makings of a short position in a stock that will most likely head south over time. By checking the volume, you will know the difference between distribution and a good old fashion shakeout.
Price Without Volume is Like Pizza Without Cheese
You would not order a pizza without cheese, would you? Well, some people do but in the pizza world these people are known as dumboberry's, they just do not know how to eat pizza. Just like some people in the stock market world do not know how to trade stocks. Volume is a very important clue and if you are trading without it, you are making a grave mistake. Our short positions were entered using volume as one of our indicators. Look at the volume on down days compared to the volume on up days and you can clearly see when they are under distribution. This puts us on the same side of the trade as the “smart money” and I like our chances when we follow them. Price without strong volume will lead you into a fake out or bull/bear trap. Confirm the move with volume and you will be on the right side of the trade most of the time.
”My Notes”
We would like to introduce a new feature on the website, “My Notes”. This link is located in the top right corner. It is an area where you can store notes for yourself in an organized manner. Just click on this link and a note pad will come up, allowing you to save any trading notes you may have. I use this feature myself and it is quite handy. A big thanks to Mike Tojo, our webmaster for creating this tool.
STHQ Chart Index
If you go to the chart index in the left side menu, you can review and study charts that we have annotated for each stock listed in the past.
For New Members
For all of the new members with us, please make sure to read the link “How to use Bulletin” at the bottom of the Bulletin page on the website. It is critical that you know how to use this trading tool before trying to trade the stocks mentioned. The effectiveness of your trades will diminish if you do not completely understand how the information is presented.
Please Tell A Friend
Please tell a friend about our service. As always, thank you for your support past, present and future!
Earnings Calendar
We have added the earnings link for each stock on the bulletin. To access the link for earnings, you can either use the link below or click the link on the bulletin for the corresponding ticker. Click the online bulletin in the left side menu for access to the earning calendar for each stock listed. It is not recommended to hold a position through earnings. You can always buy the stock back after the dust settles.
http://www.earnings.com
Stockcharts Listing
Please vote for us once a day at stockcharts.com.
http://stockcharts.com/def/servlet/Favorites.CServ...
Thank you all for voting. |
|
|
|
|
|
|
