Fibonacci DiscoveredRelative Strength Index (RSI)
By admin | April 25, 2008
RSI is a technical indicator that calculates the magnitude of a stock’s price gains versus loses over a specific period of time, and converts that calculation into an index reading that ranges from 0 to 100.
RSI detects a stock’s price for overbought and oversold condition with its index reading. Overbought means overvalued, while oversold means undervalued. It has two limit bands. The default reading of the upper limit band is 70 while the lower limit band is 30. Halfway in between the 2 limit bands is the center line with a reading of 50. The default time span for its calculation is 14 period.
The idea is to be cautious, if not avoid, to long a position should the RSI reading is approaching 70(overbought) as a fall back in price, in terms of probability, may be expected soon. On the contrary, investors who intend to short their positions need to be cautious should the RSI reading id approaching 30(oversold) as rebound in price, in terms of probability, may be expected soon.
Neither an index reading of above 70 constitutes a sell signal nor an index reading below 30 constitutes a buy signal.
Topics: Relative Strength Index, Technical Analysis | No Comments »
Moving Average Convergence/Divergence (MACD)
By admin | April 23, 2008
MACD is a technical indicator that is based on the moving averages. It measures the difference between two exponential moving average lines based on price, commonly using standard time value of 8 period and 17 period. The first EMA line shall be shorter in time, such as using a 8 period EMA line. The second EMA line shall be longer in time, such as using a 17 period EMA line. Added to this, a 9 period EMA line of MACD is added to serve as a trigger line for the shorter 8 period EMA line. As a member of the oscillator group, MACD has a centre line, which is called the zero line.
As strong bullish signal is generated in the event that MACD line is the first rising, then crossed above the zero line, and then crossed above the 9 EMA MACD line OR MACD line is first rising, then crossed above the 9 EMA MACD line, and then crossed above the zero line.
A strong bearish signal is generated is generated in the event that MACD line is first falling, then crossed below the zero line, and then crossed below the 9 EMA MACD line OR MACD line is first falling, then crossed below the 9 EMA MACD line, and then crossed below the zero line.
Topics: MACD, Technical Analysis | No Comments »
On Balance Volume (OBV)
By admin | April 20, 2008
On balance volume is a technical indicator that measures the positive and negative volume flow of stock. The logic behind the formula is that the movement in a stock’s volume will come before the movement in price. An increase in a stock’s price along with a rising direction of the OBV signals a stock’s price uptrend. An increase in a stock’s price but with a falling direction of OBV may serve as a warning that the current price uptrend is not strong hence may not last.
On the contrary, a decrease in a stock’s price along with a falling direction of the OBV signals a stock’s price downtrend. A decrease in a stock’s price but with a rising direction of OBV may serve as a warning that the current price downtrend is strong hence may not last.
Just like the EMA(60) line for volume, an EMA(14) line is plotted to the OBV indicator as a relative measure.
The logic is to find the same direction of movement between the stock’s price and OBV to confirm a stock’s price direction. In other words, if the stock price & the OBV are both showing uptrend pattern, then it is a more firm direction of movement, the same for downtrend.
See above for example of OBV plotted with the stock price for analysis.
Topics: On Balance Volume (OBV), Technical Analysis | No Comments »
Another free charting tool
By admin | April 19, 2008
Found another great charting tool with so much features and it is free!
Check out here. What’s more is that it can plt chart for not only stocks but forex and more. It can also plot charts for multi nationals including, US, UK and Italy!
The charting tool is free for end of day data, but you can ask for 7-day free trial for real time data. If you do not need real time data, the free version is more than enough for analysis purpose and it is free forever!
There is also very comprehensive help and instruction videos for beginners too.
Checkout these instruction videos here.
Below is the screenshot of the charting tool.
Topics: Candle Stick Chart Tool, Technical Analysis, Uncategorized | No Comments »
Japanese Candle Stick - Basic
By admin | April 18, 2008
Japanese candlestick has a rectangle body which varies in height. Its upper body and/ or lower body may be attached with a candlewick.
A bullish candle has a clear body. Bullish means the stock’s price closed higher than it opened for that trading period. Its lower body represents the stock’s opening price while it’s upper body represent the stock’s closing price. Its upper candlewick represents the stock’s highest price, while its lower candlewick represents the stock’s lowest price, for that trading period.
A bearish candle has a filled body. Bearish means the stock’s price closed lower than it opened for that trading period. Its upper body represents the stock’s opening price while its lower body represents the stock’s closing price. It’s upper candlewick represents the stock’s highest price, while its lower candlewick represents the stock’s lowest price, for that trading period.
Opening price represents the stock’s price when it first traded, such as at the start of the trading day.
Closing price represents the stock’s price when it last traded, such as at the end of the trading day. The high represents the stock’s highest price for that trading period, such as within a trading day. The low represents the stock’s lowest price for that trading period, such as within a trading day.
Most of the time, the high or low of the trading day may happen within the first hour of the trading day, which may be the most volatile in price swings, as specialist attempts to adjust the stock’s price when there is an order imbalance.
Candlestick represents the stock’s price - open, close, high, and low of a trading period such as minute, a hour, a day, a week, a year.
The bullish candle has a clear bode while the bearish candle has filled body, in this case with red color.
Topics: Candle Stick Basics, Technical Analysis | No Comments »
Simple Moving Average - How to calculate?
By admin | April 16, 2008
A simple moving average is calculated by computing the average (mean) price of a security over a specified number of periods.
Most moving averages are calculated using the closing price.
For example: a 10-day simple moving average is calculated by adding the closing prices for the last 10 days and dividing the total by 10.
10+ 11 + 12 + 13 + 14 +15 +17+15+16+18 =141
10 days Simple Moving Average(141 / 10) = 14.1
The averages are joined to form a smooth curving line - the moving average line. Continuing our example, if the next closing price in the average is 16, then this new period would be added and the oldest day, which is 10, would be dropped. The new 10-day simple moving average would be calculated as follows:
11 + 12 + 13 + 14 +15 +17+15+16+18 +16=147
10 days Simple Moving Average(147 / 10) = 14.7
Hence, for the last 2 days, the 10-day-simple-moving -average has moved from 14.1 to 14.7
As new days are added, the old days will be subtracted and the moving average will continue to move over time.
Here is a sample of Moving averages line plotted.
As posted in the previous post , the SMA line is usually used to indicate the support & resistance of a stock moving.
Topics: Simple Moving Average, Technical Analysis | No Comments »
Candle Stick Chart (more)
By admin | April 16, 2008
This is another free online candle stick chart tool.
Just enter a stock code, and you will see the latest chart.
There is also some additional analysis that can be freely added including:
Chart type: Candle, Bar,Line, Mountain etc
Plot style: Log or Linear
Period: Freely enter
Analysis parameters:
EMA, MACD, RSI, Stochastic, High/Low, gaps
However, unlike the candle stick chart provided by stockbroking firm like optionsXpress.com, the chart is not updated in real time.
Nevertheless, it is free and easy to use for analysis over a period of time.
Hope you will like it too.
To get this tool visit Here
Topics: Candle Stick Chart Tool, Technical Analysis | No Comments »
Stock Splits date
By admin | April 15, 2008
What is stock split?
Stock splits occurs when a listed company decided to divide its number of outstanding shares into larger or smaller number of shares without any immediate impact in individual stockholder’s equity.
Where to get stock split date?
The stock splits calendar is available Here
Here’s the screenshot:
Why avoid this date?
For instance, a company may find that its stocks are relatively to high in price when compared to others that are in the same industry. To make its stocks more affordable, it may decide to increase its number of outstanding shares with a 2 for 1 forward split, which will double the amount of the outstanding shares with a new stock’s price that is half of its original value.
Topics: Stock Splits date, When not to buy a stock | 1 Comment »
Earnings Report date
By admin | April 15, 2008
What it means?
Earnings report is a financial report released by the listed company which shows its earnings, revenues, and expenses over a given period of time such as every 3 months. Listed companies are required by the SEC to make these financial information available to the public.
Where to get this date?
The earnings calendar is available Here
Here’s the screenshot
Why avoid this date?
Since the key to stock’s price is earnings, or at least speculations of earnings, the day in which earnings result are to be announced is therefore of great importance to stockholders and other investors.
No one (Except insiders) has access to the actual earnings result of the company before the earnings report is made to the public. As such, stock’s price may begin to fluctuate with high level of volatility when approaching the earnings release date. This is more evident especially the week before the earnings release date due to wild speculations from investors.
Some stocks may exhibit big price movement right after earnings result are announced, while others do not. Since we have no idea which direction the stock’s price will go to after the earnings release, it is wise to avoid buying the stock when approaching the week of the earning release.
Topics: Earnings Report, Federal Open Market Committee meeting (FOMC), Fundamental Analysis, When not to buy a stock | 1 Comment »
Federal Open Market Committe meeting (FOMC)
By admin | April 14, 2008
What is FOMC?
The Federal Open Market Committee meeting (FOMC) is an important event in which interest rates and monetary policies decisions are announced. If the interest rate rises to combat inflation, this would mean that consumers would have less disposable income to spend and invest because they would be paying higher on the bank loans since the amount is affected by interest rates.
Where to get this date?
The economic calendar will show when will the FOMC be held. You can get this calendar Here
Here’s the screenshot:
Why avoid this date?
Higher interest rates are normally not favorable to the stock market especially the home builders and heavy industries, which are capital intensive with the need of bank financing its operations.
The FOMC meeting is one of the most important events to pay attention to and its decisions on interest rates and monetary policies would have a significant impact on the stock market, at least in the short term.
It is therefore imperative that this event be paid important attention as to avoid opening a new positions especially during the period of one week before the date of the FOMC.
Topics: Federal Open Market Committee meeting (FOMC), Fundamental Analysis, When not to buy a stock | 1 Comment »
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