EDC Breakout

Would appear EDC is leading the pack with its breakout. It led the rise before the stall, probably because of the Dow stuck at 13,000, so it rightfully should lead the next leg.

ERX Makes Target 1

ERX has achieved its target from the lower calculation (heavier green) and shows every evidence it achieve the higher one. This target calculation is achieved in 83% of cases, making it a manner of making a living. Nice way to make a living, too, I might add.

High, Tight Flag--Almost

Although this does not quite meet the 90%-rise-in-two-months criteria for the High, Tight Flag, it is close. The flag definitely meet criteria and yesterday shows a breakout.

The value of the High, Tight Flag (HTF) is that the stock will rise 69%, achieving that criteria 90% of the time, with a breakeven failure rate of zero! Statistics are unavailable for almost HTFs are unknown, it seems rational to expect good things and well worthy of a ride.

At this point, the risk seems minimal, just below the lower channel line, while the reward is 37 points--so 37:3 or better than 10:1 reward:risk ratio. With 3:1 the minimal advantage sought, 10:1 with a pattern than seldom fails, ...

The market itself is responsible for the delay since it is working its way through an area of resistance. It's P&F target is 1640, agreeing with the TNA target area.

Weekly MACD Keeps Traders on the Right Side of the Bigger Trend

The chart shows the S&P 500 ETF with weekly candles and weekly MACD (12,26,9). Even though some signals may seem late, this classic indicator combines trend following and momentum to keep players on the right side of trend. Moves above the signal line favor the bulls, while moves below favor the bears. At the very least, traders should attempt to trade in harmony with this indicator.

C Breakout

Citigroup enjoyed a breakout over a longer term trendline. Two targets are calculated, but both appear not realizable for months. I would become more interested when, as, and if the price were to return to the lower channel boundary.

DIG, ERX Breakout?

Today was a pause day in the markets after the dramatic appreciation of Friday, but it is merely a pause day as indicated by the market indicators.

Even with a pause day, some issues are breaking out. DIG, for example, is the Ultra ETF for Oil & Gas, and has been butting up against a resistance level numerous times--but each downward excursion recently has been less. Such patterns indicate a breakout to the flat side, which here is upwards. Today, near the close, it is peaking over that resistance level and closed on the high.

ERX is the 3X ETF for Oil & Gas companies, which has also exhibited the resistance level. Today, it close at that level, but did not peak over. It appears either or both may be poised for a profitable run.

TNA Hits Target

TNA gaped up on today's good employment news to exceed the target set back November 27th, and evoked by breaking out on December 22nd. The Measured Rule used to calculate this target states simply that the lowest excursion below the trendline can be used to calculate a target above the trendline from the point of breakout. This target is reached 85% of the time. The Point & Figure target calculated virtually equaled this target.

Both trendlines (heavy blue lines) were retested and on January 5th a linear regression channel was drawn that remains valid even today. A position taken at that time around 46 would today yield a profit of 17 points in a month. Touches of the lower channel line also provided seven additional entry points during this month, had the initial one been missed or additional positions been wanted.

The position opportunity on January 9th coincided with a Bollinger band squeeze, and prices gaped above a major resistance level the next day. The entire price appreciation has also taken place above the Bollinger band centering moving average. This particular Bollinger band used a 13-day simple moving average rather than the more traditional 20-day average. Had the twenty days been used, the squeeze would have not been apparent.

This trade validates resistance levels (horizontal red lines) because each caused price pauses and retests, the retests providing the additional entry points. It validates trendlines (blue lines), regression channels (black lines with the outer channel lines 2 standard deviations away from the linear regression line itself), the Measure Rule for target price determination, and Bollinger bands (red center line with two blue lines 2 standard deviations away).

Finally, the trade validates the potential of swing trading--the attempt to profit by the variation of prices over a several-day time span.

Pending Market Turn or Pause?

Several issues are breaking their runs either as a trendline or regression channel. These may well be the first hints of a pending market turn or pause.

TNA 02/01/2012

After a couple tests of the lower channel and resistance level lines, it popped up over 6% today.