In a recent article, we highlighted the usefulness of point and figure (P&F) charts. This week we revisit the charts and explain how they can be used to find precise targets. That can help traders determine whether the potential rewards of a trade are acceptable, given the level of risk involved.Rather than reviewing the construction and fundamentals of the P&F chart, we would refer readers to the previous article which can be found here. In this article, we will describe two techniques for determining price targets.Both techniques are based on the concept of symmetry, a principle that technical ...
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Like many analysts, we closely follow the actions of Warren Buffett. Widely regarded as one of the greatest value investors of all time, Buffett’s investment decisions provide the only insights available to his thought process. He never fully explains why he buys or sells so we are left to study the action.Recently, Warren Buffet's investment company Berkshire Hathaway Inc. announced that it is buying a majority stake in Pilot Flying J, the truck stop company run by Cleveland Browns owner Jimmy Haslam. Flying J was the source of the fortune used to purchase the football team.Details of the deal ...
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Traders are familiar with the Dow Jones Industrial Average, the Dow. It might be the most widely followed stock market index in the world. The index was developed by Charles Dow in the late 1800s and has been maintained ever since.Even though it’s almost 120 years old, the Dow is not the world’s oldest stock market average. That honor belongs to the Dow Jones Transportation Average, or the Transports. That average was also developed by Charles Dow and was his first attempt to tie the stock market and the economy together.Stocks generally go up when earnings are rising. This usually ...
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This week, we wanted to take a look at low priced stocks. We are defining these as stocks that are priced at less than $5. We often focus on stocks that trade at low prices and there is a reason for that – these are the stocks that are most likely to record large gains.The stock market provides an enormous amount of data. It also provides the opportunity to make large amounts of money. The opportunity provides a motive to study the data and there are detailed studies on almost every aspect of market behavior.There are studies on how ...
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Traders often look at price charts. Their goal is to identify the direction of the trend. It’s a simple goal, and often a straightforward task to determine whether the trend is up or down.In the chart below, we see the iShares Russell 2000 Index Fund (NYSE: IWM). The trend appears to be breaking out to the upside after months of consolidation.This is one of the most popular charts, drawn in a style known as candlesticks. For a candlestick chart, the range between the opening and closing price is drawn as a rectangle. In the chart above it is colored green ...
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Once again, we are continuing to provide real time buy recommendations for a successful trading strategy at the beginning of the year. Each month, we provide a list of stocks that have historically delivered gains for the next month. It’s time for us to update on this strategy.We are following one of the simplest seasonal trades possible. Few traders follow seasonal strategies although these strategies are often profitable. They are also relatively low risk because they limit market exposure to short periods of time.To apply this strategy, every month we are running a scan to find the stocks with the ...
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The MACD is one of the most popular technical indicators. It is widely available on a number of free web sites and is frequently shown on charts. But, it might not be well understood. In this article, we’ll take a look at what the indicator is, how it’s used and whether or not it works. Defining MACD Formally, MACD is the Moving Average Convergence-Divergence indicator. It has been available to traders since at least the 1970s when Gerald Appel began writing about it. The indicator is most commonly viewed as a series of bars, like the ones shown below prices in the ...
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Investors are increasingly worried about a bear market. This is probably almost always true but there are more reasons than usual to worry right now. Valuations are stretched, with many fundamental metrics exceeding levels reached in 2007 and 2000.In addition to the fundamentals, technicals are a cause for concern. Prices have been going up for more than a year without even a 10% pullback. There hasn’t been a 20% pullback in more than 8 years. Pullbacks relieve the excesses that build up over time and are usually considered healthy.Of course, these indicators apply to the stock market, as a whole ...
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