What Are the BEST Technical Indicators for Successful Trading?

November 14, 2011 – 4:38 pm

8 technical analysis tools that give any trader an edge
November 14, 2011

By Elliott Wave International

You may have seen a TV ad where “traders” describe their strategies, and one says, “I trade on fundamentals.” That sounds very reassuring — except that, on any given day, “fundamentals” are a mixed bag:

  • You might have a good U.S. employment report…but bad news from Europe
  • A positive Fed statement…but a negative housing number
  • Strong earnings…but slowing consumer spending

And so on. Which “fundamental” factor trumps the other? Which one carries more weight in your forecast? Your guess is as good (or bad) as anybody’s.

Your alternative is technical analysis, which forecasts the markets’ short- and long-term moves based on objective metrics, not guesses.

Here at EWI, we’ve always strived to help our readers learn to think for themselves. So we’ve put together for you a free 8-lesson report, “Best Technical Indicators for Successful Trading” that teaches you how to use these technical tools:

  1. The Personality of Elliott Waves
  2. Head and Shoulders Pattern
  3. Fibonacci Retracements
  4. Advance-Decline Line
  5. Sentiment
  6. Volume
  7. Trendlines
  8. Momentum Analysis Using MACD

Here’s a small preview of this free 8-lesson report.

Trendlines

A trendline represents the psychology of the market; specifically, the psychology between the bulls and the bears. If the trendline slopes upward, the bulls are in control. If the trendline slopes downward, the bears are in control.

Moreover, the actual angle or slope of a trendline can determine whether or not the market is extremely optimistic, as it was in the upwards sloping line in Figure 1-1 or extremely pessimistic, as it was in the downwards sloping line in the same figure.

Now we’re on to the fun part — drawing trendlines. You can do this several different ways…

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In this free report, you will learn some of the most effective tools of the trade from analysts at Elliott Wave International, the world’s largest technical analysis firm.

Find out which technical indicators are best for analyzing chart patterns, which are best for anticipating price action, even which are best for spotting high-confidence trade setups — plus how they all complement Elliott wave analysis.

Download your “Best Technical Indicators” report now >>

This article was syndicated by Elliott Wave International and was originally published under the headline What Are the BEST Technical Indicators for Successful Trading?. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

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Stock Market Update for 11/10/2011

November 10, 2011 – 11:13 am

While stocks moved sharply higher at the start of trading on Thursday, buying interest waned not long after the open. The major averages have subsequently pulled back well off their highs for the young session.

Currently, the major averages remain in positive territory, although the Nasdaq is only just above the unchanged line. The Nasdaq is up 2.39 points or 0.1 percent at 2,624.04, while the Dow is up 85.64 points or 0.7 percent at 11,866.58 and the S&P 500 is up 7.84 points or 0.6 percent at 1,236.94.

The initial strength on Wall Street was partly due to easing concerns about the financial situation in Europe, with a successful bond auction in Italy pulling the yield on Italy’s benchmark 10-year bond back below 7 percent.

News that former European Central Bank Vice President Lucas Papademos has been selected as Greece’s new prime minister also generated some positive sentiment, easing some of the recent uncertainty.

Upbeat U.S. economic data also contributed to the early strength, with the Labor Department releasing a report showing an unexpected drop in initial jobless claims in the week ended November 5th.

The report showed that jobless claims fell to 390,000 from the previous week’s revised figure of 400,000. Economists had expected jobless claims to increase to 400,000 from the 397,000 originally reported for the previous week.

A separate report from the Commerce Department showed that the U.S. trade deficit unexpectedly narrowed in September, as the value of exports increased at a much faster rate than the value of imports.

Nonetheless, stocks were unable to sustain their initial upward move, as traders continued to express concerns about the outlook for the global economy.

Despite the subsequent pullback by the broader markets, networking stocks are seeing continued strength in early trading, resulting in a 1.2 percent gain by the NYSE Arca Networking Index. Cisco Systems (CSCO) is leading the sector higher after reporting better than expected first quarter results.

Banking, railroad, and natural gas stocks are also seeing early strength, while notable weakness has emerged among airline and gold stocks.

In overseas trading, stock markets across the Asia-Pacific region saw considerable weakness on Thursday following the overnight sell-off on Wall Street. Japan’s Nikkei 225 Index tumbled by 2.9 percent, while Hong Kong’s Hang Seng Index plummeted by 5.3 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the French CAC 40 Index is down by 0.2 percent, the U.K.’s FTSE 100 Index is up by 0.1 percent and the German DAX Index is up by 0.7 percent.

In the bond market, treasuries are giving back some ground after moving sharply higher in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 8.8 basis points at 2.043 percent.

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Earnings: Stock Market’s Brightest False Beacon

November 3, 2011 – 11:25 am

“Earnings estimators are too pessimistic at bottoms and too optimistic at tops,” explains EWI’s president Robert Prechter
November 03, 2011

By Elliott Wave International

Four times a year, investors and Wall Street watch the quarterly corporate earnings reports, trying to anticipate the trend in stocks. Another earnings season is upon us right now, so read this excerpt from our free Club EWI report, “Market Myths Exposed.”

“Myth No. 1 — ‘The bottom line is earnings drive stock prices’ — Investopedia.com.

“It’s simply not true. The flawed notion that profits drive stock prices is something that EWI has discussed numerous times over the years. For one thing, quarterly earnings reports announce a company’s achievements from the previous quarter. The trends in earnings and stock prices sometimes even move in opposite directions, such as in the 1973-74 bear market when S&P earnings rose every quarter as the S&P declined 50%. More recently, earnings have been cycling with stocks, but that still leaves the problem of reporting delays, which leave investors eating the market’s dust when the trend changes.

“To try to get around this, pundits use analysts’ estimates of future earnings as a guide. In doing so, however, they are subject to the same herding impulses as investors. As [Robert Prechter's] Conquer the Crash puts it, ‘Earnings estimators are too pessimistic at bottoms and too optimistic at tops, just when you most need the indicator to tell the truth.’”

The S&P earnings hit a new record in Q2 of this year. This chart from our September 2011 Elliott Wave Financial Forecast puts them next to the Dow. Observe when the previous high in earnings took place:

Market Myths Exposed, a FREE ebook from Elliott Wave International, uncovers 10 of the most common misconceptions about the markets that can affect your investment decisions. Learn the truth about inflation and deflation, the FDIC, diversification, speculation and more in this 33-page eBook.Get valuable insights you won’t find anywhere else. Download your free eBook >>

This article was syndicated by Elliott Wave International and was originally published under the headline Earnings: Stock Market’s Brightest False Beacon. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

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A Rising Market Won’t Stop the “Economic Rot” Beneath

October 17, 2011 – 2:54 pm

Are you prepared for when the “disconnect” between the market and economy reconnects?
October 14, 2011

By Elliott Wave International

Suppose you see a lovely house — one with great curb appeal. It has new paint and manicured shrubbery out front.

But also suppose that you look more closely. You press your thumb on the window sill and the wood frame crumbles in. Come to find out, the wood is rotten in too many places to count. The deck joists and supports are fractured. Even the terrain underneath the deck looks unstable. And the closer you look the worse the problems are.

It’s obvious that very few people would buy that house. Yet you can be pretty sure that the home’s owner will have “good things” to say about the place.

Likewise, today’s stock market has plenty of cheerleaders — even as the rot spreads throughout the economy. Real estate and homebuilding sector alike continue to decline in the wake of the mortgage meltdown. Municipalities continue to have growing budget problems. We’re not talking about a “small town” bankruptcy, either. An Oct. 12 Reuters headline reads:

“Harrisburg, Pa., Files for Bankruptcy Protection.” The story goes on to say that “The Pennsylvania state capital faces a $300 million debt crises…”

This Oct. 12 headline is from Bloomberg: “California Kids Face Days Without School as Revenue Gap Imperils Education.” It continues: “Public schools in California…are bracing for a $1.7 billion cut that may wipe out high-school sports and student busing, and trim the academic calendar by seven days next year.”

The economic problems run much deeper and wider than these stories can reflect — yet they are indeed today’s stories. The capital of one of our biggest states is filing for bankruptcy? That should serve as an alarm. Then again, the market is rallying just weeks after the downgrade of U.S. Treasury debt.

So when will optimistic financial investors wake-up to reality?

“At some point in the trend toward negative social mood, fear, and then panic, will bring to light the risks that people today are ignoring. Global credit deterioration is objectively real; but disaster will strike only when it becomes subjectively realized.”
Elliott Wave Theorist, September 2011

Collective psychology could “catch up” to the objective economic reality sooner than later.

Will you be prepared when the economic reality hits?Robert Prechter has just released a FREE report — with urgent analysis from his August and September 2011 Elliott Wave Theorist letters, including an excerpt from a special video presentation that he created for his subscribers in August.

Stocks — Buying Opportunity or Another “Free Fall” Ahead? will help you put these uncertain markets into perspective so that you’ll be better positioned to both protect your investments when needed and prosper when opportunities arise.

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This article was syndicated by Elliott Wave International and was originally published under the headline A Rising Market Won’t Stop the “Economic Rot” Beneath. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

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Triple Top Forming in US Stock Market

September 16, 2011 – 12:14 pm

(Video) Bob Prechter Explains ‘Triple Top’ Forming in U.S. Stock Market

This excerpt from the special video issue of the August Elliott Wave
Theorist brings you Bob Prechter’s analysis of the triple top
that has been forming in the U.S. stock market over the past 12 years.
Watch as Bob himself explains what this pattern means for you and the markets.

You can get even more analysis – including an 84-year
study of stock values – that will help you gain perspective
about the recent market moves with Elliott Wave International’s FREE
report, “Reality Check: Studying the Past to Bring
Clarity to the Future.”

You’ll get a glimpse into the in-depth analysis Robert Prechter presents
each month in his Elliott Wave Theorist with 3 excerpts from
his most recent issues.

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Robert Prechter.

Read Bob Prechter’s FREE report “Reality Check: Studying the Past to Bring Clarity to the Future.”

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NASDAQ 100 Analysis for 09/15/2011

September 15, 2011 – 8:12 am

The indexes saw an expansion of their daily ranges yesterday that was nearly double those of the day before. The Nasdaq 100 now is the clear technical leader on the upside.

The S&P 500 and Russell 2000 are still struggling at the relative midpoints of their recent counter-trend rally. The Nasdaq 100, by contrast, briefly broke out above its 50-day moving average. It did not close above that level but did manage to break above it intra-day.

The S&P 500 has more than 45 points to go to just reach its 50-day, pointing out a key distinction in index behavior. The NDX is trading in a well behaved bullish price channel, while the SPX is actually in a bearish downtrend channel at the moment that is far wider and erratic.

Given the range expansion in the Russell and the S&P, I am sticking with the wider-range format of the last six weeks for those indexes with two numbers each for support and resistance. Traders should be aware that there is some risk now of those ranges being broken, given the behavior we saw yesterday.

For the Nasdaq 100, previous resistance becomes support and it gets a fresh resistance level. The S&P 500 and Russell 2000 also see support roll up, but their moves were not as decisive as what we saw in the NDX. There could be considerably more volatility in these indexes.

The S&P 500 support is at its 10-day moving at 1182.51, then 1155.47. Resistance is at 1192.89, then 1212.92

The Russell 2000 has support at 695.39, its 10-day moving average, then 681.43. Resistance is at 712.11, then 718.59.

Nasdaq 100 (NDX)

First support is at 2237.55. First resistance is at 2284.66.

For the PowerShares QQQ (QQQ) first support is at $55.27. First resistance is at $56.08.

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Please Don’t Miss This…

August 8, 2011 – 8:05 am

Options Traders,

We just received a rare opportunity to offer you free U.S. market analysis from the world’s largest market forecasting firm. I strongly encourage you to consider this offer. Other than the fact that Elliott Wave International has fully-prepared their subscribers to take advantage of the recent free fall in US stocks, they never offer free trials to their services. Don’t miss this opportunity to find out what’s next for the US markets.

Check out the details below…

 

Elliott Wave International – World’s Largest Market Forecasting Firm

From the Desk Of: Robert Folsom
Date: August 4th, 2011
Subject:

This brief message is all about you. To start with, however, I have to say something “about me.” I’ve been with Elliott Wave International since 1992: That’s a good long time, long enough to have seen lots of days when our staff did all it could to deliver forecasts that prepared subscribers for what’s next.

Yet today stands above virtually all those others. I can scarcely recall a day when we’ve been able to offer 1) So much, 2) So immediately, that is 3) So urgent.

Here is where it’s all about you. Earlier this year, The Elliott Wave Financial Forecast (EWFF) specifically forecast the juncture we’ve arrived at now — it said most people believe the markets and economy are recovered and growing. But there were TWO parts to that forecast; the time has come for the second part to unfold. You’re a few keystrokes away from what EWFF is saying now for free (new issue posts tomorrow, Aug. 5).

What’s more, you’re a few keystrokes from reading Robert Prechter’s current commentary in The Elliott Wave Theorist, again, for free. He provides you with a context to understand the events of the past week and month, which you simply cannot find elsewhere (you won’t need to wonder why the blue chips are now down on the year for 2011 — you’ll know why).

Finally there’s the forecast in The Short Term Update: Earlier this week we alerted subscribers to action in the S&P 500 and Dow Industrials which broke below critical price levels. Perhaps you’ve heard some of the chatter on news and financial websites in the past 48 hours about a “head and shoulders” pattern. Yet Short Term Update subscribers got THAT news two weeks ago, back on July 20 — along with a specific price level that would confirm the forecast.

This is a wealth of forecasting; you can have it immediately; and the moment is indeed urgent. I’ve never seen a day quite like it.

My colleagues here at EWI have put together a two-week free trial to all three of the services I mention above. Together, they we call them the Financial Forecast Service and they deliver the most comprehensive coverage of the US markets available anywhere. Now, if you are already familiar with EWI, you know that we NEVER offer free trials to these services. But you must act now as this offer ends Wednesday, August 10.

Find out what’s next for the US markets.

Thanks for reading,

Robert Folsom
Elliott Wave International

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world’s largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private around the world.

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Technical Analysis Update for 08/04/2011

August 4, 2011 – 8:19 am

technical analysisThe indexes had one of the most volatile sessions in recent memory yesterday.

The day began with a plunge that broke important support levels but, within an hour or two of the open, much of the damage had begun to be repaired. By day’s end, after several tests to the flat line, the indexes closed modestly higher.

That move was enough to bring the indexes closer to resistance than we had been at the end of Tuesday’s session. Considering that support levels noted below had been seriously violated intraday, that move was all the more spectacular. One of the big winners of the day were technology stocks, which helped make the Nasdaq 100 the outperformer of the day.

In sum, the levels we began with yesterday are nearly identical today. We will have to see if the bulls can maintain the up higher. If they can, this would make a third time down to key support, possibly leading to yet another test of the highs down the road. We are still in the range we have been stuck in for the year-to-date period.

Nasdaq 100 (NDX)

First support is at 2284.18, its 200-day moving average. First resistance is at 2316.19, its 50-day moving average.

For the PowerShares QQQ (QQQ) first support is at $56.08, its 200-day moving average. First resistance is at $56.87, its 50-day moving average.

S&P 500 (SPX)

First support is at 1249.05, the March low. First resistance is at 1262.87.

For the SPDR S&P 500 (SPY) first support is at $125.28, the March low. First resistance is at $126.19.

Russell 2000 (RUT)

First support is at 757.52. First resistance is at 783.17.

For the iShares Trust Russell 2000 Index Fund (IWM) first support is at $75.29. First resistance is at $78.14.

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Stock Market Update for 08/02/2011

August 2, 2011 – 10:18 am

stock options tradingAfter moving notably lower at the open, stocks have regained some ground over the course of early trading on Tuesday. The major averages have climbed well off their lows for the young session but remain in negative territory.

Currently, the major averages are still posting modest losses. The Dow is down 35.91 points or 0.3 percent at 12,096.58, the Nasdaq is down 6.56 points or 0.2 percent at 2,738.05 and the S&P 500 is down 4.85 points or 0.4 percent at 1,282.09.

The initial weakness on Wall Street came amid concerns about the outlook for the U.S. credit rating, with traders worried that ratings agencies could still downgrade the U.S. government’s AAA rating despite the agreement on the debt limit.

Recent disappointing economic data along with continued concerns about the outlook for the budget deficit suggest that the rating could still be at risk. A downgrade of the government’s credit rating could lead to higher interest rates.

Another disappointing economic report also generated some selling pressure, with a report from the Commerce Department showing an unexpected drop in consumer spending in the month of June. The drop in spending marked the first decrease since September of 2009.

The Commerce Department said that personal spending fell by 0.2 percent in June compared to economists’ expectations for a 0.1 percent increase.

Peter Boockvar, equity strategist at Miller Tabak, said, “With consumer spending making up a big chunk of GDP, it’s no wonder that growth has stalled out as all the factors we all know continue to inflict the American consumer.”

The report also showed that personal income edged up by 0.1 percent in June, coming in below economist estimates for an increase of 0.2 percent.

While most stocks have regained ground following the initial move to the downside, notable weakness remains visible among airline and banking stocks. The NYSE Arca Airline Index and the KBW Bank Index are down by 1.3 percent and 1 percent, respectively.

On the other hand, health insurance and healthcare provider stocks are seeing early strength, moving back to the upside after seeing substantial weakness in the previous session.

In overseas trading, stock markets across the Asia-Pacific region moved lower during trading on Tuesday, offsetting the gains seen in the previous session. Japan’s benchmark Nikkei 225 Index fell by 1.2 percent, while Hong Kong’s Hang Seng Index slid by 1.1 percent.

The major European markets are also seeing weakness but have moved off their worst levels. The U.K.’s FTSE 100 Index and the French CAC 40 Index are both down by 0.4 percent, while the German DAX Index is down by 1 percent.

In the bond market, treasuries are seeing strength on the day, extending a recent move to the upside. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.7 basis points at 2.713 percent.

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Stock Market Preview for 07/29/2011

July 29, 2011 – 8:30 am

options tradingU.S. stock index futures are lower this morning on very light volume. Most Asian markets fell overnight in reaction to the preceding U.S. session and the postponement of the House vote on the debt-ceiling issue.

Most European indexes are down 1 percent or more after Moody’s said it would review the debt rating of five Spanish financial companies, including Banco Santander. Spain’s government also called for general elections four months ahead of schedule.

In currency markets the euro fell against the dollar. The only two currencies in the U.S. Dollar Index basket to rise against the greenback are the Swiss franc and the Japanese yen.

Despite the lower dollar, most commodity prices are falling. Energy, agricultural products, industrial metals, and silver are lower. Silver broke below the psychologically important $40 level. Gold edged fractionally higher.

In stock-specific news, Yahoo shares gapped up more than 5 percent in the last few minutes after the company and Alibaba reached a settlement on Alipay.

Starbucks turned in solid results after yesterday’s close, sending the stock up more than 1.5 percent. Expedia shares were last up nearly 5 percent after beating most analyst expectations on earnings when it reported last night.

Newell Rubbermaid beat its consensus EPS but cut its outlook for the remainder of the year. The stock is up more than 3.5 percent in the pre-market.

QLogic shares were last trading down  more than 2.5 percent following earnings reported last night. Weyerhauser is down a bit more than a percent after missing its estimated earnings by $0.03 per share and warned for its coming third quarter.

Newmont Mining shares are down more than 1.5 percent after the company missed adjusted earnings estimates by $0.08.

Earnings season will begin to wind down from the pace of the last few weeks starting on Monday. Select S&P 500 companies set to report then include Allstate, Boston Properties, FMC Corporation, Humana, Loews, and Principal Financial.

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