Saturday, November 24, 2007

Trend qualifiers

New highs or new lows: New highs show the strength of the stock trend. If a stocking to a new high or low it is showing the strength of the upword move or downword move. A stock must hit new highs or lows if it is in an uptrend or downtrend. A two-month calendar high or low can be used.

Base breakouts:
trending stocks must exhail before continuing further. During exhail they build a base(sideways movement). a base breakout is when a wide-range bar that goes higher occurs after a sideways market movement. Sideway movement shows that buyers and sellers are in gear.
When the stock breaks out of this base the buyers have gained control with the likelihood that the trend is developing[1]

Gaps in the direction of the trend:
there various gaps. gaps in the direction of the trend suggests strong demand for the stock as buyers are bidding up the stock before it opens.[1]

Laps in the direction of the trend:
a lap occurs when a stock opens greater than the prior day’s close but less than the prior day’s high. This indicates that traders are willing to hold the position overnight. While not as strong as a gap, a lap in the direction of trend suggests demand for the stock.[1]

Resources:
[1] Dave Landry on Swing Trading, Dave Landry

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