I was at the New York Stock Exchange last week at the MTA Annual Symposium. MTA is the professional Market Technical Analysts Association. The symposium was held at the NYSE which was a real treat as it is always exciting and fascinating to be inside the NYSE.
NYSE officials came and gave presentations on the changing Market Structure and on the new NYSE LIFFE, which is an exchanged based Futures marketplace.
Since the merger of NYSE and Deutsche Boerse, the NYSE is undergoing dramatic changes. This directly impacts professional traders, floor traders, specialists, and eventually even you, the independent retail trader.
Meanwhile, the markets were experiencing some negative news that initiated a technical and fundamentally based sell off last week with plenty of volatility.
MetaStock Charting is one of the few charting programs that actually combines all the critical elements of successful trading: technical analysis, fundamental data and analysis, and risk analysis.
Six of the highest level technical analysts from the biggest banks in the world spoke at the symposium and all stressed the profound need for all three kinds analysis to the group of MTA professional traders.
As an independent retail trader, you too should follow the advice and the disciplines of professional traders.
Let’s look at GS, Goldman Sachs.
As MetaStock Users you have the wonderful advantage of having fundamental data: news events, strategic data, institutional data, all at click of your mouse. This makes your analysis even stronger than if you simply use technical patterns.
GS technically was in trouble in early February and the charts clearly show this pattern.
First the rounding top, one of the most insidious patterns to see but also the deadliest in terms of uptrends. Secondly, red or downside volume really dominated so even though it appeared to be a sideways action, heavy selling pressure was underway as early as February as big funds rotated out of GS.
And finally TechniTrader® Quiet Accumulation TTQA exposing that quiet rotation out of GS by big funds even before news events hit the street. The stock bounced off of support levels on the way down.
Chart 1
At the same time TechniTrader® Flow of Funds TTFF indicator also confirmed a dump was quietly underway, and the TechniTrader® Volume Accumulation TTVA slumped to a non-oscillating pattern, indicating downside pressure.
Chart 2TechniTrader® RSI/RSI shows the steady decline of price strength even as the stock moved up for the last time. The pattern clearly exposes the weakness of this stock as it topped.
Chart 3Stochastic is now floating as it does on strong momentum downside action. But this is not an overbought pattern as stochastic fails to oscillate during trending patterns, one of the big things you need to remember. The stock has bounced at support levels but will it move down further.
The assessment now must shift to the other two elements of professional style analysis:
1. Risk Analysis: what support levels will factor into the descent of this stock.
2. What Fundamentals will factor into this action.
Support levels are nearby for the moment, however if these are breached the stock could face a serious meltdown.
Chart 4Fundamentally:
I do not mean P/E ratios or Balance Sheets or the other every day stuff traders assume are fundamentals.
When I refer to fundamentals I am taking about:
1. Institutional interest: buying or selling both short term and long term.
2. Internal problems: GS has serious internal problems, investigations by the SEC and accusations of continued violations of rules, insider trading, fraud, etc. It has sneaked by a couple of times before but this time it may well face far more serious consequences.
Those are just two of the fundamentals to study on Reuters to derive a bigger broader view of GS. Sure you can study the charts and study support and resistance and trend patterns etc. But determining how far this stock can move will be dramatically enhanced with the inclusion of MetaStock’s accessibility to fundamental data and risk analysis data that will affect how this stock behaves beyond the scope of technical analysis.
TechniTrader® has always taught the Tri-Level approach to stock trading and that is why our students have such a high success rate. You don’t have to be a CPA, or an accountant to use the fundamental data that will make a difference in your trading. What you do need is the ability to know what to watch and what to ignore. What fundamental data is critical and what should be left to those who do not use technical analysis.
Use all the resources available to you with MetaStock and your success rate will improve more than you realize.
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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