Archive for March, 2007
Gauging Oversold Conditions
March 6, 2007 at 1:10 am
This week’s Free Newsletter over at TheStockBandit.com discusses the topic of Gauging Oversold Conditions. Just because a bounce is needed doesn’t mean that one is imminent, particularly a lasting one.
This market is getting short-term oversold, but there will be ample supply overhead (thanks to trapped longs) which could keep trades on the long side very tricky for the next little while. This is a great time to exercise more caution than usual even though this pullback is already somewhat extended, so stop by and check out this week’s free newsletter for some additional thoughts on the topic.
By the way, you can sign up for the free newsletter on the Free Newsletter page at TheStockBandit.com. An opt-in form is provided at the top of the page which puts you in full control of your email subscription at all times.
Trade well this week!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
TeleChart Platinum Sale
March 5, 2007 at 6:13 pm
I just received an email from Worden Brothers regarding a 1-week sale for TeleChart Platinum, their real-time charting program. I’ve been a TeleChart user for 8 years now, and this is the best sale price I’ve seen on their Platinum version (buy 8 months, get 4 free). It works out to $58 per month if you take the 2-year discount (buy 14 months, get 10 free), which is 71% off.
I’ve talked before about why I use this program and why it is the best charting program out there, so if you’re in the market for a charting program to give you a jump on your trading, be sure to check it out. Worden offers a money-back guarantee as well as a 30-day trial, which is impossible to beat.
(Their sale ends March 12th.)
Hope your week is off to a great start!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading, Stock Charts, TeleChart[/tags]
When Bulls Become Sellers
March 1, 2007 at 10:05 am
Tuesday’s big decline did more than just damage the technicals of the market. Not only were uptrends broken and bases in individual stocks completely negated with the high-volume drop, but there was a major shift in the psychology of the bulls.
For more than 7 months now, every single dip has been a good buying opportunity in the market. Lower prices have meant that stocks are on sale, and anyone who forked over some cash to scoop up the bargains was rewarded time after time. This kind of consistent behavior goes a long way toward conditioning traders and investors to buy the dips, and as a result, any pullbacks we have seen during this time have been very shallow.
Then came Tuesday.
Fear was in the air as the day began, and it never did go away. Prices went down like a lead balloon, breaking key technical levels along the way. Whether you watch pivot levels, trend lines, or moving averages, they were each severed with ease for one reason: emotion.
Wide-ranging bars in technical analysis are days which have unusually large trading ranges compared to recent history. Tuesday certainly produced a great number of these on the daily charts, and that is no coincidence. The reason why is that once traders start to see that technical levels aren’t providing adequate support, they get spooked. Emotions run higher and rules are thrown out the window. Support zones are forgotten, and all that starts to matter to those who are holding positions on the long side is getting out. At all cost. As soon as possible.
Bulls who had recently allocated cash to the market and had been sitting on gains all of a sudden in one day found their positions underwater. Green P&L statements provide comfort and confidence, but red P&L statements tend to elevate the blood pressure and raise valid concerns. Add that to the realization that big ugly down days are still possible, and all of a sudden the bulls have ample reason to want to move to the sidelines.
Those same bulls are now much more likely to become sellers into bounces. Will they sell at the first sign of higher prices? Yes, some will. Will some of them try to endure this pullback but eventually capitulate and flee for the safety of cash? Of course.
The point I want to make here is that the motivation of these bulls has changed. Whereas just recently they were concerned that the market might fly to the moon without them, now they realize that the music has at least temporarily stopped and they need a chair to sit in. The fear they have after Tuesday’s big decline is probably going to linger in their minds, and that won’t go away until they make it to the sidelines safely or things start to shape up.
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
