Tuesday, February 4, 2014

how low will this current market pullback drop?

 using the past declines since 2009 lows:
*the average biggest price drops = 10.5%

DOW JONES is just above the 200sma. the 200sma (grey line on the chart) is the average price of the past year. price should bounce off the 200sma and reverse upwards as just a 10% correction. but if it breaks below the 200sma, here are the averages below the line:
*average biggest number of days below 200sma  = 4 months
*average smallest number of days below 200sma = 8

Monday, February 3, 2014

blaming the market

"blaming the market or feeling betrayed, you dont know well enough its a zero sum game. the market owes you nothing, regardless of what you think or how much effort you put into trading." - mark douglous (trading in the zone)

linda raschke quote

"With any business, you have to pay your dues. Even though anyone can open an account and start trading, there’s a long learning curve. Even if you’re going to become a doctor, or a radiologist, or an anesthesiologist, or something like that, it takes years of seeing different patterns and different environments with different pathologies to become experienced at recognizing problems. It’s the same thing if you are set on becoming a professional golfer. You have to play in different weather, on different courses, and with different equipment until you find what works for you. " ~ Linda Raschke

dow jones down 7%, now what?

im going to write this so everyone can understand. everyones eyes r pinned on the stock market and watching last years gains dissolve. everyone has an opinion about what will happen. with a few simple lines drawn on the price chart im gonna show what has the highest probability of happening, according to some of the most trusted & successful tools in the stock market. understand the longer term picture of tyhe market still looks great. its just the smaller timeframe is all red and creating this noise. feel free to ask any question u may have:

1) looking at every days individual price which traders call the "daily." on the daily view price has closed below the 200 day moving average. this hasnt happened since october of last year. the 200 day moving average is an average of the past 200 trading days daily price. theres 220 trading days in a year, so this means current price is now below the average price of the past year. but 1 close below this average is just a "BREACH." we need another close below todays lowest price for a 200 day moving average "BREAK."

2) if price closes lower than todays lowest price then we look for the next support below which is 15000. this price is the exact level of a 10% correction off the all-high. markets tend to form "corrections" which is a name for 10% fall from the all-time high. right now we are down 7% from the all-time high. if youre a math wizard subtract the number 10 from 7, equals 3. that means we should see 3% more to the downside, and there price should stop at the 10% correction level of 15000. the markets pivots at large round numbers, so that will also add importance to the 10% correction level at 15000.

3) price is currently at the top of a "rising channel", which are 2 advancing parallel lines drawn at the bottoms and tops of price throughout a time period. stocks tend to bounce from the channel floor to the ceiling and back to the floor and so on. currently price is at the top of a 5 year channel which implies it should fall down to the bottom line of the channel, which coincidently happens to be 15000 area.

4) consider the amount of trading volume. the DOW jones selling volume has been above the average volume of the past 50 days. this means that a falling price with increased volume is considered bearish and implies further downside. but, alot of selling obviously also sets up bulls for a discount buy when they finally step back in.

5) MACD is an indicator used to determine the momentum by using the past 9, 12 and 26 which compute the most recent balance of power of traders. the MACD is currently at prior support which could act as a floor. we gotta keep an eye on the MACD and see how it reacts to the support level.

6) the RSI is another indicator and stands for "relative strength indicator." it does exactly what u would think, shows the strength of the current market traders. RSI is also a momentum indicator but is a little more short term generally looking back 14 days. the RSI is currently at 19 which is considered oversold. that implies selling could be bottoming.

Monday, January 13, 2014

SSYS (stratasys) "darvas box" since new years

SSYS (stratasys) "darvas box" since new years
what is a "darvas Box"?

1) A year high is created. that is the top of the box

2) if that year high is not broken thru, for the 3 following market days, the lowest low (of those 3 following market days) is the bottom of the box.

3) once the box has been defined, the stock tends bounce around within the box.

4) if the box is broken through on the upside, buy on the next open day above the high of the box.

5) if the box is broken through on the downside, sell on the next day below the low of the box