Archive for July, 2010

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Stock Market Technical Analysis Review 1/8/10


Technical analysis of: SPY, QQQQ, IWM, XLF, SMH on multiple timeframes. Follow me on twitter twitter.com for more daily analysis.

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How to make money in the stock market by recognizing trends with UCTrend technical analysis?

{As you know, I am incessantly on the lookout for excellent articles on Swing Trading, recognising that good information is required to learn how to swing trade.|As you are probably aware, I am constantly on the lookout for excellent information on Swing Trading, realizing that good information is required to learn how to swing trade.} {Now, I discovered a very good article that explains Swing Trading in simple language.|Recently, I ran across a really good piece of content that explains Swing Trading in easy to understand language.}{ Make sure you look over this article and let me know your opinion.|Make sure you look into this and let me know your thoughts on it.} {Today’s post is titled and you should find the entire article provided below for your convenience:|Todays piece of content is titled title and you could find the complete piece of content written below for your convenience:}

How to make money in the stock market by recognizing trends with UCTrend technical analysis?

 

Introduction

 

Reading the market

 

Choosing your suitable investment strategy

 

Stocks 

 

Following the indication

 

 

 

 

 

1. What is Technical Analysis?

 

Technical analysis predicts probable future price trends through the use of historical price charts. The chart captures price movements of the securities, their trading volume and open interest (where applicable).

Technical analysts (technicians) believe in 3 major principles:

1) Market action discounts everything.

2) Price move in trend.

3) History repeats itself.

The Underlying Assumptions of Technical Analysis

 

Underlying all of technical analysis are the following assumptions:

 

 

 

Technical Analysis looks for signs that the price has moved, and bases its strategy on the    premise that price changes will occur over a long period. When we recognize a price movement opposite to its long period supposed movement we can analyze where is it moving next.

 

1.     Advantages to Technical Analysis

 

Technical analysis offers the following:

 

Major Trading Rules and Indicators

 

Technical trading rules fall into two broad classes:

 

 

 

 

 

2.     Indicators of Market Direction

 

Breadth of Market:

 

Compare the advance-decline line with the market index. The advance-decline line is a running total of the daily advances less the declines on the NYSE. If the advance-decline line and the index move together, the movement is broadly based across the market. A divergence between the trend in the index and the advance-decline line would signal that the market has hit a peak or through.

 

Short Interest Ratio:

 

Short interest is the cumulative number of shares that have been sold short and not covered by a subsequent purchase. The short interest ratio (SIR) is used to measure the extent of short interest:   

 

SIR= Outstanding short interest/ Average daily volume on exchange. 

 

 

The SIR is calculated by the NYSE and NASD.

 

 

Stocks above their 200-Day Moving:

 

The market is believed to be overbought (a bearish indicator), when over 80% of the stocks are selling above their 200-day averages. Similarly, the market is considered to be oversold (a bullish indicator), if less than 20% of the stocks are selling above their 200-day-moving averages.

 

Block Uptick-Downtick Ratio:

 

Upticks refer to stock selling at a price above its most recent trade. When blocks of stocks are trading at an uptick price, the market is considered to be a buyer’s market. Blocks trading on downticks (prices below the previous price), are an indication of a seller’s market.

 

Upstick- downstick ratio = number of block uptick transactions /number of block downtick transactions

 

 

 

 

Reading the Market

 

1. Stock Price and Volume Techniques

 

Dow Theory:

 

The Dow Theory states that stock prices move in trends. There are three types of trends: major trends, intermediate trends, and short-run movements. Technical analysts look for reversals and recoveries in major market trends.

 

Importance of Volume:

 

Price alone doesn’t tell the story. Technical analysts attempt to gauge market sentiment, as well as direction, to determine changes in supply and demand. Thus, they look at the volume that accompanies price movements. Price changes on low volume tell us little. Price changes on high volume tell us whether suppliers or demanders are driving the change.

 

Upside-downside volume ratio = volume of stocks that increased/ volume of stocks that declined

 

 

Support and Resistance Levels:  

 

Most stock prices remain relatively stable and fluctuate up and down from their true value. The lower limit to these fluctuations is called a support level, the price where a stock appears cheap and attracts buyers. The upper limit is called a resistance level, the price where a stock appears expensive and initiates selling.

 

 

Moving Averages Lines:

 

Technical analysts believe stock prices move in trends. However, random fluctuations in prices mask these trends. By using moving averages (10 to 200 days), technical analysts can eliminate the minor blips in graphs but retain the overall long-run trend in prices.

 

 

Relative Strength: 

 

When prices of an individual stock or industry change, it is difficult to tell if the change is stock specific or caused by market movements. If the stock price and the market index value are changing at the same rate, the ratio created by dividing one by the other will remain constant. This ratio is called the relative strength ratio.

 

Relative strength = stock price/ market index value

 

 

Graphs:

 

Technical analysts rely heavily on charts and graphs in analysis of pricing and trends.

Since history repeats itself, by looking at past trends, we will be able to identify the beginning of new trends. On www.uctrend.com you can follow a stock’s graph in the past five years, and see the closing price every day and the indications given to buy or sell.

 

2.     Rules to follow when using UCTrend to forecast trends

 

3. Top investment success factors for UCTrend Technologies

 

Choosing your suitable investment strategy

 

1.     Which Stocks to Pick

Choose the information that will be most important in your stock selection. How many of each stock you should purchase (Portfolio Allocation), how and through whom you will purchase the stock.

Some of the more used methods people employ for investing in their stocks are:

 

2.  Determine your Risk-Return Preference

It is important to determine the level of risk you are willing to take. The general equation      is simply the higher the risk taken, the higher the potential return is.

Determine your investment goal, whether it is a large scale purchase like a new car or a house, or a college fund for your kids. Depending on your goals and your time period for them you can decide on your risk assessment. For example, if you have many years until retirement you can be less cautious than if you plan to retire next year. When you have decided what amount of risk you are willing to take you can decide on the aggressiveness of your investment. The least risky investment are income stocks that pay constant dividends, riskier than that are growth stocks that also have the potential for high returns. The most risky are speculative penny stocks, which are small cap stocks that are generally unknown with a very low trading volume and hence very speculative.  They entail the highest return potential along with the biggest market risk. Decide which stock type you want to invest in and follow UCTrend indications on these stock types.

 

 

3. Watch List

 

After you decided on a strategy to follow and stock types to invest in, familiarize yourself with the stock types you are interested in. In the Watch List tab on the UCTrend website, you have the ability to select a list of securities for special surveillance. You can monitor the list for indications. You can select a list with special characteristics, such as company type or geographic location.

 

 

 

 

Stocks

1.     Sectors, Markets and Individual Stocks Indications

UCTrend provides a specific indication possibility. This is an option to receive a specific indication for a security of your choice. Direct your indication search and receive a dynamic graph, the closing price, and the percent return of the last cycle the security closed. (Please see the ‘Technical Calculator’ dropdown under ‘About UCTrend’ for the definition of a complete cycle.)

You also have the ability to sort by indices or sectors. You can view a report for a specific index and see the indications for the index members and for the index itself. Also, you can see a sector report and view the indications for the stocks that compose the specific sector.

 

2.     Complete Cycle Opportunities for Making Money When the Market is Up or Down

The Complete Cycle:

Cycle Up: The time period between Buy to Sell Indications.

Cycle Down: The time period between Sell to Buy Indications.

We use a special model of closing a cycle. We recognize where the low pricing point for a stock is and indicate to buy it. Once it starts rising, more people will buy it and by the growing demand it will continue growing until it will reach the top and then fall again. This is considered a regular business cycle. We use a very advanced mathematical algorithm that manages to identify these high and low points and enable you to do just that, buy low and sell high. What makes the UCTrend model so special is because of the cycles’ method, you may actually make money in both a rising market and a falling market. When the market is falling, a sell indication is received. You can short the stock, and then repurchase it. When a buy indication is received and the cycle down is closed, a profit will be realized.

 

Following the Indication

 

1.     Tracking Historical Performance

On the indication graph you can see the indications that were given for a specific security and their results for a time range of up to five years. You can also see the performance for all the stocks that closed a cycle (from buy to sell or from sell to buy) in the past month. Lastly, you can see UCTrend’s performance compared to the benchmark of the Dow Jones and the S&P 500 and see how UCTrend managed to consistently outperform these major indices.

 

2.     Setting Alerts

 

Once an investment strategy is decided, you can start getting indication alerts for the securities of your choosing in a form of electronic messages. Go to ‘Set Indication Alert’ under the ‘My UCtrend’ tab and chose which stocks you want to receive an email alert for.

 

 

 

 

 

 

VISIT US AT WW.UCTREND.COM.

     YOUR RIGHT MOVE AT THE RIGHT TIME!

 

[1] The perceived actual value of a security, as opposed to its market price. 

 

 

 

 

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