Trading Tips

Dear Reader,

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Wealthpire, Inc.

When one looks at Bollinger Bands, one generally looks at two things: (1) how far apart or how close together the Bollinger Bands are, and (2) where the stock’s current price is in relation to those Bands. Well, just as Bollinger BandWidth quantified the width of Bollinger Bands, Bollinger Band %B quantifies exactly where a stock’s price is in relation to those bands — and while “eyeballing” may seem easy enough, this indicator is far more useful and reliable than you might think at first.

In this episode, you’ll learn:

- How Bollinger Band %B is calculated and what its outcomes mean — there are six general outcomes each with their own meaning.

- What Bollinger Band %B can do — and how it is often misused in an attempt to make it do something it was not designed to do!

- The five significant levels of Bollinger Band %B to look for.

- How to add Bollinger Band %B to your charts at StockCharts.com.

We also take a look at a chart that shows an instance where you might think Bollinger Band %B is saying the stock is overbought — but it’s not. Later, %B gives a correct oversold reading that you might miss if you don’t know what to look for. Generally speaking, a high %B indicates a stock is overbought and a low reading means its oversold, but this can often be misleading. In order to know exactly how you should interpret %B, watch this video!

Bollinger Bands are some of the most useful technical indicators I know of, and their use is greatly enhanced by the introduction of Bollinger BandWidth. However, it is Bollinger Band %B that is most useful, and that’s why I’ve saved the best for last.

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

P.S. In our next episode, we’ll be looking at Volume-Weighted Average Price (VWAP), a vital indicator for day-trading. See you next week!

Using Bollinger Band %B to Identify Overbought and Oversold Stocks

In this episode of the TradingTips.com video newsletter, we won’t be looking at a pattern formation, a technical statistic, or a chart overlay. Instead, we’ll be looking at an actual stock pick made for the week of May 23, 2011.

In this episode, you’ll learn:

- The identity of the stock in question, along with background information and recent earnings.

- What I see in the stock, and why I think it’s a buy.

- The recent events that have transpired that not only make this the right stock pick, but now the right time.

- The precise entry point, price targets, and stop-loss I intend to use with this stock pick.

The episode also features charts and statistics to illustrate the case for the stock. We look at its recent history, as well as its trading over the past six months. The stock in question has been sliding for quite some time, and had a big sell-off recently: but now it’s oversold, under-valued, and ripe for a big rebound!

The stock pick reviewed in this episode has valuation metrics that are lower than the industry average and its own five-year averages, across the board. Its PEG is just 0.7. And it’s a blue-chip stock you’ve heard of: in fact, you’ve probably shopped there in the past year. What is the stock? View this week’s episode to find out!

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

P.S. In our next episode, we’ll be looking at Bollinger Band %B, a vital indicator for stock traders. See you next week!

Episode 75 –Editor’s Stock Pick – Staples (SPLS)

There are dozens and dozens of technical indicators and chart formations that predict whether a stock is due to go up or down… What there aren’t a lot of is indicators that accurately predict WHEN a stock is about to make a major move. This is what Bollinger BandWidth is good for — not determining which WAY a stock is likely to go, but IF it is about to make a major move.

We looked at Bollinger Bands way back in Episode 20 of TradingTips.com, and if you’re unfamiliar with them, I encourage you to go back and watch that video. We do offer a brief refresher in this video, but the focus of the episode is on Bollinger BandWidth, and even if you use Bollinger Bands on a daily basis, it pays to understand BandWidth, too.

In this episode, you’ll learn:

- What Bollinger Bands are and what they measure — this is essential for understanding Bollinger BandWidth.

- What it means when Bollinger Bands are far apart and what it means when they’re close together — and how far apart or close together they need to be in order for the width to be significant.

- How to “eyeball” a chart and determine if its Bollinger BandWidth is significant. You can either do the complex math or learn the skill of reading a chart, which is a lot easier than you might think.

- How to add a special Bollinger BandWidth line to your charts for those special instances when “eyeballing” either can’t work or isn’t good enough.

We also take a look at a chart with tightening and loosening Bollinger bands to illustrate how Bollinger BandWidth predicts a major price swing — but not a swing in any particular direction.

John Bollinger invented Bollinger Bands and, of course, Bollinger BandWidth, and to him, BandWidth was always the key. Yes, Bollinger Bands can be used to see when a stock is likely to encounter support and/or resistance, and they can tell you when a stock has already broken out — but BandWidth PREDICTS the breakout before it happens. Which would you find more useful?

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

P.S. John Bollinger also invented another Bollinger Band-related indicator: Bollinger Band %B. We’ll look at that one in our next episode!

Episode 74 –Bollinger BandWidth – A Simple But Effective Tool for Predicting Breakouts and Sell-Offs

Have you ever felt like the stock market was rigged against the average street-level investor?

If you’ve ever felt that way, I am here to tell you that it is! The truth is that a secret Wall Street
society has (up till recently) kept you and me out of the loop. Behind closed doors, in Manhattan
penthouses, they’ve quietly sucked the markets dry and left the rest of us the scraps.

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Despite the fact these little-known trading secrets are now out there hardly anyone has a clue. Your stock broker, investment advisor or banker doesn’t know either. Actually, they do, sort of… but… can’t tell you how to profit from this situation. Armed with this information you just might be able to say goodbye to money worries. Perhaps forever.

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Sincerely,

Manny Backus, President
WealthPire, Inc.

In this episode of the TradingTips.com video newsletter, we won’t be looking at a pattern formation, a technical statistic, or a chart overlay. Instead, we’ll be looking at an actual stock pick made for the week of April 18, 2011.

In this episode, you’ll learn:

- The identity of the stock in question, along with background information and recent earnings.

- What I see in the stock, and why I think it’s a buy.

- The recent events that have transpired that not only make this the right stock, but now the right time.

- The precise entry point, price targets, and stop-loss I intend to use with this stock.

The episode also features charts and statistics to illustrate the case for the stock. We look at its recent history, as well as its trading over the past six months. We look at several key statistics and indicators and speculate as to how the stock’s current supply and demand could lead to a nice surge in its share price.

The stock reviewed in this episode has insider and institutional ownership that exceeds 100%. How is this possible? Watch and find out. The stock also has a PEG ratio of 0.5, which means it could double and still be considered a “value stock.” What stock is it? There’s only one way you’ll know: watch the episode!

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

Episode 73 — Stock Pick of the Week: WMS Industries

“Slope.” An optimist might think of Aspen and skiing when confronted with the term, and math whizzes may fondly remember Junior High, but for the rest of us, the term takes us back to Geometry class: Slope = Rise over Run. Well, you’ve probably gone your whole life without using that tidbit of public-education knowledge — until now, that is… Slope is back!

This “Slope,” however, will help you make money. Yes, it uses the same “rise over run” principle, and it even throws in some linear regression for those who made it past Stats 101 in college, but the good news is that you don’t really have to understand the underlying math: whether you “get it” or not, Slope is easy to read, and makes identifying trend direction and strength a breeze.

In this episode, you’ll learn:

- What Slope is, how it’s calculated, and how you can use it — both from a practical standpoint (i.e., how to add it to your own charts) and from an interpretative standpoint (i.e., how to use it to make money!)

- How Slope can show determine trend direction even when the basic stock chart says something different — and there are examples of how using Slope could have made or saved you a lot of cash.

- How Slope can determine the strength of a trend: Say you know which way the market is heading, but is it likely to keep going that way? Slope can help you find out.

This video does this by taking in-depth looks at real-life examples. For instance, we study a Dow Jones Industrial Average chart that shows how Slope could have been used to rake in huge profits during the financial meltdown of ’08. You could have known when to buy, when to sell, when to short, and when to cover — Slope told you exactly when!

Slope may seem overly complex with all of its geometric terminology and linear regression, but in today’s day and age it’s easy to use — and after you see how you could have made big money in the examples in this video, you’ll probably never want to make another trade without it again.

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

P.S. In our next video, we’ll look at Bollinger BandWidth, which was a favorite of John Bollinger himself. See you next week!

Episode 72 — The Slope – How to use it to determine trend direction in the stock market

The Advance-Decline line is a fabulous market indicator that can help you confirm trends and predict reversals. It does this by basically “taking attendance”: How many stocks are showing up for the rally? If it’s just a few stocks doing all the work, the bullish trend probably isn’t that strong, but if participation is widespread, then the trend is probably for real.

Of course, the reverse can be true, too: If there is a bearish turn, then the more stocks that are sinking, the more significant the drop. If, however, it’s just a few laggards really dragging everyone else down, then perhaps a recovery is on the way.

But I’m getting ahead of myself: How can a market indicator do all of this? It’s actually quite simple. Watch this week’s episode and you’ll be an expert on the Advance-Decline line.

In this episode, you’ll learn:

- How “Net Advances” are calculated, and how these are used to draw an Advance-Decline line (0:35).

- How the Advance-Decline values are calculated, with a table illustrating how running totals are used (1:17).

- How to interpret the Advance-Decline line when using it as an overlay on top of a major exchange’s chart (2:13).

- How to add the Advance-Decline line to your own charts — once again, this is a little trickier than normal, so be sure to watch this part! (4:20).

This video makes liberal use of charts and tables to illustrate how Net Advances and the Advance-Decline line work. It also includes a list of ticker symbols for the net advances of five major stock exchanges.

The Advance-Decline line can be used with any major exchange, but it is recommended for use with the NYSE only. Why? You’ll have to watch to find out!

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

P.S. In our next video, we’ll look at Slope. No, we’re not returning to Geometry class! What is Slope as it pertains to the stock market? Tune in next week to find out… Until next week!

Episode 71 — Advance-Decline Line – A Market Indicator That Confirms Trends and Predicts Reversals

Are you familiar with the Volume By Price Indicator? If
not, you’re not alone: VBP is unknown by most, but it is a
great indicator of support and resistance — arguably
better than traditional support and resistance lines.

Volume By Price is simple, straight-forward, and easy to
use. The principle is that it looks at the volume
occurring at various price levels. If there is a lot of
volume at a particular price level, then it’s likely to be
a support or resistance line. But which? To find out,
watch this episode:

In this episode, you’ll learn:

- What Volume By Price is and how it works (0:29).

- How Volume By Price is calculated (1:10).

- How to interpret Volume By Price to identify support and
resistance (2:21).

- How to add Volume By Price to your charts — be sure to
watch this part because it’s a little tricky (2:48).

This video also takes an in-depth look at a real-life
chart with a Volume By Price overlay, returning to the
example to reinforce newly learned information.

Volume By Price is an under-utilized indicator that lets
you quickly identify support and resistance levels via a
simple graphical interface. Once you learn how to use VBP,
you may never go back to drawing lines on your charts ever
again!

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

P.S. In our next video, we’ll look at the Advance-Decline
line: A market indicator that confirms trends and predicts
reversals. Until next week!

Episode 70 — Volume By Price

The world of technical indicators is dominated by grizzled veterans who got their starts in the 1960s and 70s. But among these “middle-age” indicators, there is one promising young buck, and its name is Aroon.

Invented in 1995, “Aroon” is actually a word in the ancient Indian language of Sanskrit, which means “dawn’s early light.” This is because the Aroon indicator is designed to reveal the beginning of a new trend.

Now, before I get much further, I should clarify that saying “the” Aroon indicator is a bit misleading, because each stock actually has two Aroons — an Aroon-Up and Aroon-Down. Is this confusing? Well, watch the video, and I assure you it will all make sense — and dollars, too, if used correctly.

In this episode, you’ll learn:

- What Aroons measure and how chartists use them to anticipate new trends, price consolidations, corrections, and reversals (1:02).

- How Aroons are calculated (1:57).

- How to interpret Aroon-Up and Aroon-Down (3:06).

- How to add Aroons to your own charts — this is actually a little bit tricky, so be sure to watch all the way until the end of the video! (4:06).

This video also includes a detailed, real-life example of the S&P 500 with an Aroon indicator underlay.

In this episode, you’ll learn what the Aroon indicator is, how it’s used, how it can be interpretted, and finally, how you can add it to your own charts. Like any other indicator, Aroons can only be mastered with practice, but this video will definitely give you what you need to get started.

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

P.S. In our next video, we’ll look at Volume by Price, which is an indicator that shows the amount of volume for a particular price range. Until next week!

Episode 69 — The Aroon Indicator