Stock Trading Indicators, Patterns & Indexes

Wednesday, September 30, 2009

Comparative Relative Strength Indicator

Comparative relative strength indicator or CRS indicator is a simple yet effective indicator for finding profitable trading opportunities. The indicator simply compares the performance of two securities/sectors/markets, or a security with the market or sector. CRS is calculated by dividing the first security price by the second security/market (known as base security or benchmark) price.

CRS = First Security Price / Base Security Price

Tuesday, September 29, 2009

Trading Energy ETFs

Energy Exchange Traded Funds (ETFs) tracking energy company stocks are becoming increasingly popular. Energy ETFs are widely traded by all types of traders - short-term and long-term conservative and risky traders. These are ETFs with a great diversity in themselves. There are oil ETFs which track oil and gas exploring, producing and distributing company shares or are commodity pools investing in oil derivatives like futures and options contracts.

Monday, September 28, 2009

Weekly Stock Trader Letter, September 28, 2009

The Week Ahead: An unexpected decline in August durable goods and a disappointing new home sales number were catalysts for a third straight day of declines for stocks. In addition Fed governor Kevin Warsh warned of potential aggressive tightening down the road when rates turn higher. The Case Shiller Home Price Index is released on Tuesday, and the final GDP figures for the second quarter are due by Wednesday. Thursday, October 1 brings auto sales, personal income, and construction spending data. On Friday the employment report for September will be closely watched.

Friday, September 25, 2009

Technical Correction and Technical Rally

Both technical correction and technical rally are market phenomena that occur for a stock or the market as a whole. The common features of the two are

These are not triggered by any fundamental or economic factors but by technical reasons.
Are short-lived - after that the stock/market resumes the original trend.

Thursday, September 24, 2009

Bullish Side by Side White Lines

Bullish side by side white lines is a bullish trend-continuation candlestick pattern indicating continuation of an existing bullish trend. This is a three candlestick formation comprised of all bullish (white or colorless) candlesticks.

Wednesday, September 23, 2009

Detrended Price Oscillator

Detrended price oscillator or DPO, as the name suggests, is an indicator which removes long-term price trends/cycles to identify short-term trend cycles and overbought and oversold levels. The idea is that a long-term trend consists of many short-term cycles and one can find good trading opportunities and turning points in trends by smoothing the long-term trend. Detrended price oscillator compares the closing price of a security with its moving average prices (n/2) +1 periods ago.

Tuesday, September 22, 2009

Gold ETFs Trading

Gold exchange traded funds (ETFs) allow traders and investors to profit from ever changing gold prices. They passively track gold prices and thus the investor needn't invest money in physically buying/storing the precious commodity. Gold ETFs are getting very popular today. They can be of many types.

Monday, September 21, 2009

Weekly Stock Trader Update, September 21, 2009

The Week Ahead: The money market mutual fund guarantee by the government ended on September 18 while the FDIC and FHA are running out of funds and may tap large credit lines with the Treasury. Leading economic indicators from August are due on Monday. The FOMC begins a two day policy meeting on Tuesday concluding with an interest rate decision by Wednesday afternoon, The jobless claims figures and existing home sales arrive on Thursday. Durable goods orders and new home sales are released Friday.

Friday, September 18, 2009

Investing after Panic Selling

Panic selling or the madness of the crowd causes great decline in stock prices and might lead to investors losing their money. But it also creates opportunities for investors to buy stocks at lower prices and sell them later for higher prices. Investing after panic selling is a trading strategy which requires good planning, market timing, and courage as well as technical and fundamental analysis.

Thursday, September 17, 2009

Bearish Tweezers Top Pattern

Tweezers top is a bearish market reversal pattern usually indicating an intermediate-term reversal of an existing uptrend. It is considered a weakly reliable candlestick formation and has two or more candlesticks with ideal highs. Bearish tweezers bottom can be considered as a short-term double top formation. The formation is considered widely as an indicator of short-term resistance levels.

Wednesday, September 16, 2009

Stock Market Weekly Update, September 15, 2009

The Week Ahead: The stock markets 6 month rebound has helped push consumer sentiment to a 3 month high. Tuesday is a key day for economic stats as business inventories, retail sales, and the Producer Price Index will be released. The August Consumer Price Index as well as Industrial Production numbers are on the calendar for Wednesday. Weekly jobless claims and housing starts are slated for Thursday.

Wednesday, September 9, 2009

Keltner Channel Trend Indicator

Keltner channel is a popular indicator for analyzing trends and for finding trend changes. The indicator was introduced by Chester W. Keltner in 1960 in his book 'How to Make Money in Commodities'; Keltner named this indicator 'Ten Day Moving Average Trading Rule'.

Tuesday, September 8, 2009

Stock Market Newsletter, September 8, 2009

The Week Ahead: Unemployment continues an upward trend reaching 9.7%, but the pace of job loss slowed down to 216,000 in August. Healthcare reform will be top priority as congressional lawmakers return to D.C. on Tuesday. The Feds beige book of economic activity is released Wednesday with a scheduled primetime address by the President later that day. Jobless claims are due Thursday while wholesale trade numbers and import prices come out on Friday.

Monday, September 7, 2009

Trading the Earnings Calendar

Companies listed in stock exchanges have to release and file their earnings reports every three months. The period in which most companies report their earnings is a period of high volatility. Many traders, especially short-term traders and swing traders, closely watch the earnings calendar to find good trading opportunities.

Friday, September 4, 2009

Initial Public Offering Procedure

Initial Public Offerings (IPOs) are always considered good trading and investing opportunities. IPOs are also the key step, from which a company's financial info and growth potential are made available to the public. An initial public offering procedure is as follows:

Thursday, September 3, 2009

Bullish Tweezers Bottom Pattern

Tweezers bottom, or kenuki bottom, is a bullish market reversal pattern usually indicating an intermediate-term reversal of an existing bearish trend. It is a weakly reliable candlestick formation consisting of two candlesticks with identical lows. Bullish tweezers bottom can be considered as short-term double bottom formation and is a good indicator of short-term support levels.

Wednesday, September 2, 2009

Aroon Indicator for Trend Analysis

Aroon is a relatively new indicator developed by Tushar Chande in 1995, which is used to analyze the direction and strength of trends. Aroon, a Sanskrit word meaning ‘dawn’s early light,’ represents the long-term or short-term trend existing in a stock or currency and also predicts trend reversals. It is an indicator comprising two lines Aroon-Up line and Aroon-Down line. Aroon-Up line measures the amount of time (in percentage) since highest price during the time period and Aroon-Down line measures the amount of time (also in percentage) since lowest price during the time period.

Tuesday, September 1, 2009

Trading ETFs Futures Contracts

With the increasing popularity of exchange traded funds (ETFs) in recent years, the futures contracts on them are also becoming popular. Although traded much differently, ETFs futures also allow the traders to profit from the price volatility of tracking index or market. They were introduced into the market in 1997 and currently there are three stock index futures traded – S&P 500 Depository Receipts (large-cap stocks), NASDAQ 100 Index Tracking Stock (top 100 financial companies listing on NASDAQ) and IShares Russel 2000 Index Fund (small cap stocks).

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