The Trend

Why Investors Are Sending Markets Higher, Especially Small-Caps

Six months ago, President Trump signed the Tax Cuts and Jobs Act.

Half a year into the cuts, the economy is on sound footing, despite fears of a trade war. Unemployment is at multi-decade lows. Even corporate stock buybacks are reaching record highs, sending markets to unbelievable heights.

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$90 Oil Prices: Why It Could Happen in 2018

For most of 2018, oil prices have churned higher.

Granted, prices took a short breather in early May through June 2018, but that proved to be short-lived on fears that supply won’t be able to offset issues.

In fact, since the middle of June 2018, oil ran from a los of $63.50 to $74 a barrel – its highest point in about four years thanks to OPEC’s underwhelming news of a smaller than expected increase in oil production.

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This Pattern Has Not Happened to Gold Since 2016

The last time this happened, gold sank from $1,306 to a low of about $1,125.

Nowadays, at the same price of $1,306, it’s happening yet again, and analysts are fearful it could pinpoint to further downside for the meal.

If you look closely at this chart, you’ll see what happened when the 50-day moving average crossed below the 200-day moving average in November 2016.  Nowadays, it’s happening again with a slight crossover today.

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Three Treacherous Technical Patterns on the Dow Jones

It is absolutely imperative that traders pay close attention to key technical patterns, especially when it could cost them thousands of dollars.

In June 2018, it was safe to say the market was in train wreck-mode.

In fact, on June 19, 2018, the Dow Jones fell more than 350 points on fears of trade war escalation with China. At the time, President Trump threatened to impose another $200 billion of tariffs on Chinese goods if Beijing follows through with its promise to retaliate against our first round of tariffs.

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Engulfing Candlesticks: How to Spot Them and What They Mean

To the average trader, candlestick patterns are a bunch of crosses and odd shapes with bizarre names, like the three black crows, or the abandoned baby bottom. 

But as odd as they may sound, they can provide powerful insight into direction.

For example, one of the oddest ones is the doji cross. But if you spot one of these at top or bottom of trend, you may have uncovered an opportunity to trade a trend reversal. The profit stars, more commonly known as dojis, are commanding reversal signals. These are formed when the candlestick opens and closes at the same level, implying indecision in the stock price.

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These Technical Indicators are Musts for Your Trading Plan

Every time you trade a stock, it’s essential that you understand the psychology of the buyers and seller.  If not, you begin to run the risk of losing money.

That’s the last thing any of us want to do.

So, we need to understand if the bulls have gotten ridiculously, and unsustainably bullish.  And we need to understand if the bears have begun to lose their minds after a sell-off.

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Two Essential Technical Patterns to Follow at All Times

It is essential that you’re well aware of support and resistance points.

If not, you could be setting yourself up for abysmal failure.

Support represents the moment when buying begins to overwhelm selling and prices begin to bounce back. Resistance represents the moment when selling begins to overwhelm buying and prices begin to pivot.

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The Importance of the Money Flow Index (MFI)

When it comes to trading, one of the best ways to tell what’s happening is by paying attention to the flow of money in and out of a stock. 

Surely, none of us want to buy a stock if money is flowing out, right? 

Instead, we want to buy if we’re seeing money flow in, or short if we begin to see signs that money is about to start flowing out of a stock.

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The Importance of Flag and Pennant Setups

We’re often told that technical analysis is worthless, or that it’s just a guessing game.

It’s the same argument over and over again.

But as proven time and time again, technical analysis with pattern recognition can lead to some amazing returns. In fact, simply using a combination of Bollinger Bands (2,20), moving average convergence divergence (MACD), relative strength (RSI), and Williams’ %R (W%R) can pinpoint reversals after bouts of excessive fear and greed 80% of the time.

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The Only Four Technical Tools You’ll Ever Need to Use

Any time you ignore technical analysis, you’re doing yourself a great disservice.

Especially true if you’re trying to book quick wins.

Not only does it allow you to exploit incredible bouts of fear and greed, but it gives you an opportunity to spot pivot points before most of the herd does.

Look at Activision Blizzard (ATVI) for example.

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Never Panic at the 50-Day Moving Average

Volatility was alive and well in early 2018.

After a stellar, explosive run to 26,500 in early 2018, we sank nearly 3,000 points to challenge the psychological line in the sand at the 50-day moving average when all was said and done.

Granted, the Dow could always catch triple bottom support and turn higher.

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Technical Analysis: RSI Can Lead to 80% Success

Traders are often told to buy excessive fear or greed.

Unfortunately, many aren’t aware of when to actually pull the trigger, or realize when fear or greed have gotten way out of control.

But there’s a simple way to know exactly when to buy and when to sell.

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Trading Strategy: The Best Time to Buy Excessive Fear

The best time to buy fear is when there’s too much of it.

But who in their right mind can tell when there’s just too much?

Honestly, anyone can.

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Crash Alert: How Smart Investors Hedged in February 2018

In February 2018, we warned of impending downside.

And downside we got.

Shortly after the warning, the Dow would plunge more than 1,000 points before a slight recovery to 25,800. But thanks to fears of a trade war, the Dow again plunged another 1,000 points.

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Trading Secrets: One of the Easiest Ways to Trade Oil Prices

For the better part of 20 years, I’ve noticed an interesting pattern with oil.

While OPEC, non-OPEC, supply-demand, and international chaos certainly play a major role in determining direction, oil prices often fall within a predictable technical pattern, as dictated by excessive fear and greed.

Here’s a two-year chart of oil prices for example.

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Never Overlook Support and Resistance Levels

Understand how the market moves, and you increase your odds of success.

In theory, markets are pushed higher and lower by fear and greed -- two of the strongest psychological drivers of all assets. 

For example, many times you’ll hear technical analysts refer to the ongoing tug of war between bulls and bears, or the struggle between buyers, which represent demand, and sellers, which represent supply.  When looking at fear and greed on a chart, we begin to look at the technical parameters of support and resistance, or a price floor or ceiling.

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An Easy Way to Spot Pivots in Stocks

One of the best ways to make money on the Street is by spotting excessive bouts of fear and greed. 

In fact, that’s how some of the most famous investors made their money.

In short, they were buying when others were scared, and selling when others got too greedy. They were exploiting the very psychology of herd mentality.

And we can do much of the same.

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