When deciding which technical analysis software you would like to use you may find that many investors are combining technical analysis and fundamental analysis when investing in stocks and other financial securities. While many investors feel strongly about one using only one type of analysis, there are those investors who practice fundamental analysis, who may utilize some of the tools available with technical analysis software.
Some of the technical analysis methods that the fundamental trader may use include volume trends and indicators. Trading volume is one factor that helps investors to gauge market sentiment. Large spikes suggest to investors that a stock has gotten a lot of attention from the trading community and that the shares are under distribution or accumulation. There are popular volume indicators used in volume trading that help the investor to confirm whether or not other investors agree with the perspective of a security. A sudden decrease in volume can suggest to traders that interest has been lost and that a reversal may be on its way. Technical analysis software that is helpful with this includes intraday charting (see intraday trading). This type of charting is popular because it helps traders to watch for spikes in volume.
Other ways that fundamental traders will use technical analysis tools include tracking reactions over time. Fundamental traders will look at a chart of a specific stock, industry, market, or index in order to determine how that entity has performed over time. Patterns have a tendency to repeat themselves and investors react to in similar manners over time. Through analyzing historical trends, stock investors can estimate possible reactions to future events.
Stock investors can also track short-term stock movements. Fundamental investors opt to focus on trading over the long haul, but the odds are that they still want to find favorable buy-in price and favorable selling prices when liquidating a position. Stock technical analysis software is the key to doing this. Stock technical analysis tools such as the moving average can assist the trader in doing this. Moving averages are used by chartists and some fundamental investors to determine longer term break out patterns. They see this as a way to solidify a favorable entry or exit price for a particular stock.
There are many other technical analysis tools that are available to investors including Fibonacci indicators, stochastics, as well as trend trading. Many investors either practice one type of analysis or the other, however there are those investors who believe that that both fundamental and technical analysis can and should be combined at times.
Market Direction
Where are the big profits being made in this market? In the stocks that are breaking out! Breakouts are usually the result of extended positive bullish sentiment. That is exactly what has been developing over the past three weeks. Ever since the appearance of a bullish cradle pattern in both the Dow and the NASDAQ, the expected result of that pattern has been exhibited, a very strong bullish move.
An extended bullish move facilitates individual stock prices to move to the point where investor enthusiasm builds up greatly. How do you find stocks that have the potential of breaking out? The candlestick patterns! The Fry pan bottom, the Scoop pattern, and the Cradle pattern have produced inordinate profits over the past three weeks. They easily provide the visual format for identifying which stocks are at the point of breaking out. All boats will rise in a rising tide. The benefit of candlestick analysis provides investors is the identification of chart patterns that result in very large profits.
DOW
As the market continues its upward trend, currently showing the signs of some toppiness, but not yet showing any evidence of the sellers taking control, investor confidence is producing more and more big price moves. Last week, our VCI recommendation had over a 45% move in one day, producing approximately a 60% return in one week. The same results are occurring in a good number of recommendations.
SQNM
TCK
One of the comments from the chat room today hit the nail on the head about candlesticks signals. Although the market was traded relatively flat, their portfolio was up 2 1/2% to 3% for the day. This is one of the inherent benefits of using candlestick analysis. Simple portfolio management techniques will have a portfolio that was established from signals or patterns that produce high probabilities of profitable trades. The strength in those signals or patterns will usually carries through on flat or even bearish trading days. This is the result of establishing positions based upon stronger than normal buying indications entering each individual stock price.
Candlestick signals produce powerful implications. Use that information to your advantage. Whether daytrading, swing trading, or long-term investing, the information built into candlestick signals provide a high probability trading program that continually puts the probabilities of being in the right positions at the right time.
FUPAW – The Profit Scanner Training session scheduled for today, Monday, July 27, was not scheduled appropriately. It has now been rescheduled for tomorrow afternoon, Tuesday, July 28, 4:15 p.m. ET. Click here for instructions.
Chat session tonight for members at 8 p.m. ET.
Due to travel conflict, Thursday night chat session, July 30, will not be scheduled.
Next Monday and Thursday’s sessions will be scheduled if Internet connections can be made.
Good investing,
The Candlestick Forum Team
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