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How To Trade A Gap Up

How To Trade A Gap Up

On December 12, 2014, Adobe Systems (ADBE) gapped up on earnings to $74.17.  The stock closed the prior day at $69.74.  Now, the novice trader might think that the stock was moving up too much and therefore he or she should short it, while the experienced trader would want to look long for a bigger move. This is where experience pays off. Questions To Ask The first question I ask myself in reviewing premarket gaps is, “Why is it gapping?”  Once I have identified that it is gapping because...

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Buy The S&P 500 For Profits In 2015

Buy The S&P 500 For Profits In 2015

Recent economic, global and geopolitical events have put traders on edge. A plethora of negative news items have allowed the bulls to box themselves into a corner in the “wall of worry”. The good news is that the S&P 500, the stock market, and US economy are set to surge in 2015. This means that now is a good time to be looking at stocks and getting long the broad market. Worries plaguing the market include an apparent stall in US manufacturing activity in December, a slight rise in...

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Holiday Stress and Trading Pressure: How to S.T.O.P. the Torment

Holiday Stress and Trading Pressure: How to S.T.O.P. the Torment

The holiday season is here.  It’s time for celebrating and good cheer.  It’s also a time of heightened stress.  For many traders, who already feel lots of stress, the holidays can feel doubly difficult.  Trading and Holiday Stress We all know trading stress.  Recent losses and drawdowns can bring on stress.  So can managing a position, especially if it backs up on you.  Even profitable positions can be stressful.  We don’t normally think about profitable trades as stressful, but I have...

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RSI, Better Price Oscillator Than MACD

RSI, Better Price Oscillator Than MACD

Most traders are unaware there are three types of oscillators used for stock analysis. These are based on three different data streams – Price Oscillators that use price and time data, Volume Oscillators that use quantity and time, Hybrid Oscillators that use price, quantity, and time. There are innumerable price and time indicators and many are oscillators, but one stands out from all the rest – Relative Strength Index (RSI). It is not the most popular, but it is the best price oscillator...

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SPX 1540 Target – Don’t Count It Out

SPX 1540 Target – Don’t Count It Out

When we are in an environment where traders are “All in” or “All out” and price is moving at warp speed, you have to shorten your time horizon. There are specific time periods where you can buy and hold and do very well, but, from what I am seeing, that period is gone. Elliot Wave (EW) counting has become very popular in the trading community. I am not going to make this an Elliot Wave article, but I will instead use EW to explain why you may have to shorten your time horizon with trades....

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Loss Of Momentum Signals Caution

Loss Of Momentum Signals Caution

The drubbing in the stock market last week was hard to watch, but as things stand, there isn't any evidence to suggest it's more than a dip within an uptrend. And the S&P 500 has quickly come to a natural point for a recovery to occur. Specifically, price has reverted to the weekly mean (20-week simple moving average), as you can see via Bollinger Bands.   In uptrends, it's common for price to revert to the mean during pullbacks or consolidations before moving on to the next leg up to...

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Trading Fears – Why We Have Them And What To Do About Them

Trading Fears – Why We Have Them And What To Do About Them

Trading fears are not the sole domain of new traders, actually far from it. Much misunderstood, fear can hit at any time. The real issue about trading fears has to do with bumping up against your thresholds, which can happen at any time. Growth and Development, Evolutionary Universal Laws You are growing and changing all the time, for the most part not noticing that it is happening. However, when an evolutionary impulse hits, and you are standing in the way, like most people are, it can...

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Pay Attention To The Cycles

Pay Attention To The Cycles

7-Year Cycle Highs For several decades, the Dow has exhibited a cycle of seven years between highs. It has been as short as six years and, on one occasion, it stretched closer to eight years. All cycle highs matched the highs of Lindsay’s basic cycles. The previous cycle high was in Oct 2007, which makes a cycle high due now. The high should be point H of Lindsay’s long cycle.  Past experience implies it could come as late as Oct 2015 but a six-year cycle low makes that very unlikely. ...

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Planning For Retirement? Plan Again

Planning For Retirement? Plan Again

It's Christmas time. Everyone has been good little boys and girls, working diligently these past 40 years or more, marching toward America's promise, the golden years when one can lay down the work tools and enjoy the comforts of retirement. A False Promise The post-war generation – World War II – came back and raised families based on a simple promise –work hard, buy a house, save money, and when old enough, retire, as in stop working. Now, their children are ready to realize that promise...

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Estimated Tax Payments, A Primer For Traders

Estimated Tax Payments, A Primer For Traders

For the majority of Americans, income taxes are collected on a pay-as-you go basis through the automatic withholding on their wages through their employers. However, if you receive substantial income from dividends, interest, business income, and/or capital gains, you should check your estimated tax liability to verify if you need to make estimated tax payments. Failure to pay a required estimated tax installment will subject you to a penalty based on the prevailing IRS interest rate...

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SPX: Is This Finally The Break The Bears Want?

SPX: Is This Finally The Break The Bears Want?

The S&P 500 Index (SPX) of large cap stocks has just finished its worst week in three years – down 65.23 points for a net weekly loss of 3.15%. It lost 1.6% on Friday alone. Look out below. The bears have been waiting for something like this for more than a year. In a market that has tripled in value since 2009, and which has now gone 68 months without a 20% correction, the law of averages says there's got to be a break sometime. So is this the time? Maybe, but we aren't ready to throw...

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Watch The VIX

Watch The VIX

The movement in the VIX is something to pay close attention to, as it can provide an important warning of potential trouble for the stock market.  The chart below is a long-term look at volatility and the S&P 500.  The black line shows the S&P 500 Index and the red line shows the S&P Volatility Index. Note the last period of sustained low VIX (from the years of 2005 - 07) that preceded the 2008 financial crisis.  It is worth noting that prior to the index making its high in...

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Market

Learn Why Technical Analysis is Important in Options Trading

Learn Why Technical Analysis is Important in Options Trading

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Stocks

Trade On The Side Of Institutional Money In Gaps

Trade On The Side Of Institutional Money In Gaps

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