online stock trading, online trading

by Ken Matsumoto - Mar 13, 2006
Swing Trading Strategies for the full or part-time day trader.
Swing Trading is the art of capturing profits in trending stocks in a relatively short amount of time.

Notes to Charts:
 
Daily Chart:

• This Daily chart here defines the trading range the market which started back in November 2004
• MAs went into an uptrend at ( A ) with the MA crossover up.  This marked the start of the uptrend which ultimately lead to new multi-year highs
• Recent pullback in the market was supported right at the MAs ( B ). 
• 20 EMA crossed below the 50 EMA, representing a Daily Chart downtrend at point ( C ). 
• Market EMAs (20 and 50 EMA) have crossed up, putting the Daily chart back into an uptrend ( D )
• Market reversed the first trading day in January with a surge off of its 50 day EMA, to keep the uptrend in tact
• After a market top in Mid January, market has pulled back to the uptrending MAs in two waves.  Recent market action has several bullish green candles surging above the MAs.  We will watch the year highs carefully for signs of a continuation of the current uptrend
• Market rallied today to close above its 5 day EMA ( E ) changing its short term bias to an uptrend.  This is a red flag to the current Hourly downtrend
• Stochastics nearing oversold levels but remain in a downtrend ( F ).  A crossover up near these levels would indicate a short term bullish signal

Hourly Chart:    

• Market quickly moved to the top end of the recent range and has MAs in an uptrend in early January
• After a few days of trading at the 20 hour EMA, market fell to close below all the MAs.  MAs crossed over down into a new Hourly Downtrend with the 20 EMA below the 50 EMA ( G ) .  
• The Double bottom ( H ) was confirmed after the MA crossover up ( I ), indicating a new Hourly uptrend
• Soon after the new Hourly uptrend, MAs did a crossover down at point ( J ), indicating a sideways range as noted by the frequent MA crossover 
• Market returned to a uptrend  after a few days of sideways trading with crossover up ( K )
• After holding a nice trend above the MAs, market pierced through to new multi-year highs ( P ).  However, subsequent market action is signaling a possible false breakout with the pullback into the trading range. 
• After two attempts at the resistance area, market has pulled back causing an MA crossover down ( M ), confirming a failed breakout attempt
• Market rallied today but remains at the downtrending MAs.  The Hourly downtrend still remains in tact with the 20 EMA below the 50 EMA

5 Minute Chart: 

• After the intraday downtrend started at point ( N ).  Market has entered into a sideways trading range

Assessment:

The longer term trend is up with the 20 EMA up above the 50 EMA on the Daily chart.  Market recently traded to new Multi-Year highs, but followed that up with a pullback to the 20 day EMA.  This could possibly spell trouble for the current uptrend on the market.  We will watch market action around this MA closely for early clues as the sustainability of the current uptrend.

Despite today's rally, the short term trend is still down with the 20 Hour EMA below the 50 Hour EMA.  We do not possible red flags to the current downtrend coming from the Daily chart with prices closing above the 5 day EMA and Stochastics nearly turning up from near oversold levels.  We will continue to watch the Hourly MAs and the 20 day EMA on the daily chart carefully for any changes on the current trend.    

We now have conflicting signals between the short term and long term trend. We will therefore remain conservative with our trading while keeping our eyes open for trading opportunities on both sides of the market with a slight bias to the short side.

These charts are here to help you get a visual picture of where we stand in the market from a broad to a very detailed perspective. Recognize where we are and what kind of trend we are in, rather than trying to predict market direction.