Hi Everyone,
Before we start this week’s Spatial Pattern Recognition Skills discussion, I want to let you know of a couple of Events you may be interested in following.
My early morning Twitter notes are designed for swing, velocity, day and intraday traders so they can prepare for the day’s trading activities. You can follow my pre-market open notes at
http://twitter.com/#!/TechniTrader.
Also, Howard Johnson, my long time trading partner and I are headed to New York City for the Market Technician Association’s Symposium being held at the New York Stock Exchange. We will be in NYC all week talking to market makers, SEC officials, floor traders, market specialists, and international experts about the changing Global Marketplace for financial sectors.
If you would like to read my daily summary about the symposium and what is going on in the Professional Technical Analysts world, you can connect with us via the: TechniTrader® Facebook or Martha Stokes, C.M.T. on LinkedIn. Both will have my daily remarks and information as well as photos of this very important event.
For more information you can always go to our website under “get connected” where there are links to all of our social media sites where I post training daily or weekly.
Now on to the SPRS for this week.
One common mistake that traders frequently make is to be so caught up in the moment that they do not see what is coming next. As traders, being able to anticipate what will occur next for an individual stock and the market is critical to your success as a trader.
Consistent success, reliable trades, knowing with solid confidence that your picks will behave as you expect them to is what all professional traders have developed. This is also what is lacking for most retail traders who have inconsistent results and whipsaw gains and losses.
It is not how often you trade, but how well you trade. Keeping profits is just as important as making profits. And it all boils down to a few key elements that come from your MetaStock Charts.
MetaStock Charts have been a wonderful tool for me to create the indicators that I know traders need to be able to read and interpret the indexes as well as stocks.
Let's take a look at the Dow today.
It is often hard for traders to determine exactly where a turn of the short term trend is about to occur. You can improve your candlestick interpretation by adding watching for extreme patterns. Below green volume and TTQA TechniTrader Quiet Accumulation both have an extreme pattern just prior to the retracement we had this week.
Chart 1
Extreme patterns on volume and TTQA TechniTrader Quiet Accumulation warn traders that exhaustion to the upside has occurred and at the least, a retracement down to support levels is about to commence. Knowing ahead of time this is going to happen prepares you for the retracement in advance. You can then make decisions based on logic and MetaStock Chart Analysis rather than panicking because a trade is going against you.
Below is a chart with TTFF TechniTrader Flow of Funds and TTVA TechniTrader Volume Accumulation which track institutional activity. TTFF tracks money flowing into stocks by big funds and smaller funds. It exposes the trend of the flow of money. This is critically important because it exposes whether money flow is increasing or decreasing ahead of the price action. Flow of funds is a hybrid leading indicator and helped me call the flow of funds into stocks in February when technical patterns suggested and overbought situation and yet fundamentally the market was gaining energy from money flows.
The V bottom formation on TTFF helped define the huge influx of money into funds which cut short the downside action as buyers came in on the dip. As TTFF reached the high of the chart, it confirmed along with volume and TTQA that a short term top was imminent.
Chart 2TTVA is a unique hybrid volume oscillator which is wonderful to tracking volume oscillation patterns exposing quiet accumulation. TTVA also shows extreme patterns in volume which typically precede a correction or pull-back. The extreme low of TTVA in March clearly defined the shift from selling to buying by institutions. And the steep angle of descent after these three days of Dow moving down is an early warning of an imminent bounce.
Using candlesticks and indicators, especially institutional indicators in conjunction with one another helps to clarify and define what is happening so that you are better prepared in advance for the next trend action.
Combining candlesticks with strong indicators is the ideal way to use MetaStock® Charting to guide you in your trading.
Trade wisely,
Martha Stokes, C.M.T.
Member of Market Technicians Association
Master Rated Technical Analyst: Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses
http://technitrader.com
MetaStock Partner
(c)2011 Decisions Unlimited, Inc.
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