The Trend

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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Oil Prices: Two Ways to Spot Pivot Points

Oil is a fickle beast.

Throughout 2017, oil prices have rallied and stumbled more times than most of us care to remember thanks to global supply and demand issues.

All thanks to supply-demand imbalances, and hope.

However, there are two ways to spot when and where oil could pivot and turn.

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Gap Trading Fundamentals

All of a sudden, there’s a gap in the chart of your favorite stock.

Surprise news, earnings, something unexpected caused a bout of extreme optimism or pessimism that resulted in the move.

Look at Palo Alto Networks (PANW), for example.  In early June 2017, shares closed at $118.59.  However, shortly after the close, news of a massive cyber attack began hitting headlines.  Orders come flooding in overnight.  The next day, the stock opens at $140.

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Fibonacci Trading Made Easy

No one ever said technical analysis was easy.

But over time, with practice, the easier it becomes.

For months, we’ve introduced you to several technical tools. However, the one we get the most questions about are Fibonacci retracements. To many, this took is considered complex and outdated. But to be very honest, it’s not complex at all once you practice with it.

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Three of the Greatest Momentum Oscillators

It’s always interesting listening to fundamental and technical analysts argue.

Just as fundamental investors like to laugh at technical analysis, technicians laugh at the absurdity of investing just on fundamentals. It’s a never-ending, laughable fight.

Fundamental analysis shows us what’s under the hood, and whether or not an asset is over- or underpriced, as compared to the competition. In fact, Warren Buffett, Baron Rothschild and Sir John Templeton subscribed to this school of thought and made a fortune. They seeks to uncover the intrinsic or true value of an asset, and is dependent on future sales, earnings, and estimates. It’s pain-staking research at times.

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How to Properly Identify Support and Resistance Levels

Make no mistake, technical analysis is just as important as fundamental analysis, and some of the most influential traders in history have made fortunes by proprely applying technical analysis in their trading methodologies.

Let's take a look at how technicians have learned from Jesse Livermore:

“The price pattern reminds you that every movement of importance is but a repetition of similar price movements, that just as soon as you can familiarize yourself with the actions of the past, you will be able to anticipate and act correctly and profitably upon forthcoming movements.”

 

 

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Why the MACD is an Essential Technical Analysis Tool

We’re often told that technical analysis is a waste of time.

Traders are often told to ignore it altogether.

“Technical analysis is fundamentally flawed,” says Forbes.

“Technical analysis is stupid,” blared The Motley Fool.

But it’s just not true. In fact, technical analysis is just as important as fundamental analysis.

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Trading with the 50 Day and 200 Day Moving Averages

When it comes to technical analysis, one of the necessities for success is the moving average.  In fact, for years, I’ve personally relied on two of them – the 50-day and even the 200-day moving averages.

Each is powerful because they give us a view of a stock’s trend, as well as a look at where we may find support and resistance along the way.  For example, if I find a stock that historically bounces every time it hits its 50-day moving average, I’m likely to buy on a test of that moving average. 

That’s because, as they say, the trend is your friend.

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