The Trend

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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Technical Must-Haves: Bollinger Bands and W%R

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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Technical Patterns 101: Two Essential Candlestick Formations to Know

To a new trader, candlestick patterns are just a confusing bunch of odd crosses and oblong shapes on a chart. Even worse are the names, like the abandoned baby bottom, white soldiers, and doji stars.  But as odd as they may appear and sound, even the oddest ones can help give you the signal you need to be a successful trader.

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How to Spot When a Stock is in Trouble

Ignore a stock clearly in distress, and it’ll cost you.

If you own a stock with negative cash flows, high debt-equity ratios, profit warnings, or even heavy insider selling, the stock is clearly in trouble.

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Bollinger Bands and the Rubber Band Effect

If you pull a rubber band too far, too fast, what happens?

It snaps back, right?  The same thing happens with stocks, indexes, and currencies.  If they’re pulled too far in one direction, eventually they’ll snap back and revert to back to the mean.  In fact, we see it happen all the time.

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The Magic of Moving Average Crossovers

By now, you’re well aware of how to find trends using simple moving averages, such as the 50- and 200-day moving averages.   But you should also know how to potentially spot when a trend could stop dead in its tracks, or birth a new trend.

All we have to do is wait for a crossover to do so.

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The Most Important Concept in Technical Analysis

The trend is the most important concept in technical analysis.

Its strength or weakness can dictate the overall direction of your favorite stock or index.  Potential uptrends can be characterized by a series of higher highs.  Potential downtrends can be characterized by lower lows.

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How to Spot a Breakout Opportunity

Breakouts can trigger incredible opportunity.

Once a stock begins to trend to a new high, or takes our prior resistance points, new buyers begin to emerge, as momentum begins to pick up steam.

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Two of My Favorite 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.

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Two Powerful Candlesticks Patterns You Can Use Right Now

Over the weekend, I had a family get-together.

They’re always fun.  I get to see relatives I haven’t seen for years. 

Unfortunately, they’re also always full of people you wish you could ignore. My Uncle David is one of those people. The guy who thinks he knows everything about everything, especially about trading stocks and options.

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Kroger: One of the Most Ridiculous Overreactions

Traders overreact.  They do it every day. 

And if you can spot it in time, you could make a fortune.

Look at Kroger Company (KR), for example. 

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Gap Trading Basics

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. 

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Using Fibonacci in Technical Analysis

Nobody ever said trading was easy.

But as long as you’re prepared, the easier it becomes. Especially if you’re trading with technical analysis tools, such as Fibonacci retracements.

 

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How to Spot a Correction (and What to Do about It)

Two of the biggest catalysts in any market are fear and greed.

We’re told to buy excessive fear and sell excessive greed. 

Quite often, though, traders will sell on fear and buy on greed.  But that can be a costly error, one that even Warren Buffett can attest to.  To this day, he still advises that a “climate of fear is your friend when investing; a euphoric world is your enemy.”  And of course, we all remember his advice to “be fearful when others are greedy and greedy when others are fearful.”

 

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Oh Snap: We Tried to Warn Them

We tried to warn them.

But the hype was just too hot to ignore. 

On February 9, 2017, we noted that the Snap IPO “could be more trouble than it’s worth” based on overvaluation concerns alone.  It wasn’t a safe bet.  It never was.  Any one that did any research knew that. At 60 times earnings, it would be one of the hottest IPOs to hit the market.  Just to justify that valuation, it would need to grow its bottom line quick.

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How to Technically Trade the News

“Don’t trade the news,” they say.

You’ll lose money.  But the “experts” have it all wrong.

Trading the news is a seductive trap for those who aren’t in tune with major stock market trends.  They don’t realize that in most cases, the market’s already baked the news “into the cake” by the time it’s reported.

 

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Technical Analysis: The Case for Gold

Whenever the Federal Reserve even hints at higher interest rates, traders sell gold.

They fear gold would lose its shine, as compared to yield-bearing assets when interest rates begin to rise.  In fact, it’s why gold had five straight days of losses prior to the June 2017 Federal Reserve meeting on rates.  But with history as our guide, that’s a terrible reason to exit the trade.

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