During the summer months there are many opportunities to find stocks that are ideal for position trading. This easier paced trading style is for busy working people, and traders who do not want to be tied down to their computer monitor during the summer months.
Often times during the summer stronger companies will keep moving upward forming what I call the platform. A platform is a sideways pattern with a very narrow point range. Platforms are wider than consolidations and therefore provide far stronger support than consolidations.
Platforms are used for position style entries.
Consolidations should be used for swing, momentum, and velocity style trading.
Each has unique patterns and candlestick buy signals.
Chart 1
GHDX is Genomic Health Inc, under Health Services, Medical Laboratories and Research. As the US moves to a different structure for healthcare, some sectors and industries will enjoy significant growth while others will fall behind.
Things to look for in the chart:
1. Check the weekly chart to see where the stock price is in relation to resistance.
2. Study to see if there is strong, moderate, or weak support beneath price.
3. Check to see the percentage of institutional ownership.
4. Check for upside point potential.
5. Watch for quiet accumulation patterns during the platform building phases.
Chart 2
We will revisit this stock in the fall to see how it has performed. It is at an all time high, having pushed through strong resistance and is in a platform pattern at this time.
Accumulation is occurring as you can see from the TTQA indicator.
Position traders do not buy stocks like a daytrader, looking each day for a stock to trade.
Instead Position Traders look for stocks during quiet market activity and build watchlists. These watchlists should be between 10-40 stocks at most. Then you monitor the watchlist to find the trigger entry signal.
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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