##EasyReadMore##

Tuesday, December 7, 2010

Chart Smarts: How to Predict a Rally in Stocks

The Penny Sleuth Features: Penny Stocks, Options and High-Growth Opportunities!
Penny Sleuth
AuthorsArchivesContactWhitelist Uns     ubscribe
Chart Smarts: How to
Predict a Rally in Stocks
By Jonas Elmerraji
December 7, 2010


Dear Penny Sleuther,

What if you could know where the market was headed before everyone else? That may sound like more of a dream than reality — but the truth is that a small minority of highly successful traders is able to do just that on a consistent, repeatable basis. With the basic charting technique I’m about to share with you, you could too…

“Where’s the market headed next?” always seems to be the latest question on the lips of the financial media pundits. And for good reason… because most stocks move in concert with the broad market, knowing when to expect a big upward move in an index like the S&P 500 or Dow can signal a phenomenal time to buy stock.

That’s especially true in the penny stock world, where a small gain in the broad market can trigger a much larger gain in a handful of penny stocks.


Billionaires Use Code-Cracking Technology to Predict Stock Prices!

There’s a big wealth-exploding secret Wall Street is hiding from you…

A few firms, including the world’s largest brokerage house, are making a fortune with it. By one estimate, Wall Street is making $57 million profit every day with this secret.

Now, you can use this strategy for your portfolio. Click here to learn how it could have already made you $99,100 richer…



There are a lot of reasons why the market moves, but the financial media are rarely right about them (I’ll be talking a bit more about that in Saturday’s Weekend Sleuth). Wall Street has trained individual investors to believe that all of the market’s moves are news-driven and unpredictable. But that’s pretty far from the truth…

While economic news can certainly be the catalyst for a move in the markets, so can technical factors, which are based purely on price behavior. The key difference is that those market technicals are readily predictable.

Last week was a perfect example…

After all, the week’s upward move probably left “traditional” fundamental investors scratching their heads — with Black Friday sales numbers behind us, and new anxiety over European debt causing its share of problems, why on earth would stocks rally?

But rally they did. The S&P 500 gained nearly 3% on the week, a large upside move for any index comprised of sluggish blue-chip stocks that typically only move up 10% in a year. And every bit of that upside was predictable…

Take a look at the chart of the S&P 500 below:



In the chart, which comes from November 19, the S&P is sitting between the two horizontal support and resistance lines (in an area called a trading channel). Simply put, support and resistance act as a price floor and a price ceiling, respectively, for a stock. They’re not particularly difficult to spot either — resistance is the place where the S&P had difficulty moving above in the past (around 1230), whereas support is the level that the S&P bounced off most recently (around 1175).

So, how does a chart from mid-November tell us about what the market was going to do during the first week of December?


6 Penny Stocks to Own Right Now…

Penny Stock Fortunes is giving away SIX penny stock recommendations to all new subscribers!

But you must hurry because these plays could explode at any time.




It all comes down to those support and resistance levels. Ultimately, there are two outcomes for any stock: upward moves and downward moves (that part should be obvious). But by knowing where key support and resistance levels are, we are essentially getting a hint about which of those choices has a higher chance of happening. Barring some kind of significant catalyst, it’s less likely that the market will move above or below support and resistance levels.

During the end of November, the S&P started consolidating at the bottom of that trading channel. Again, anyone could tell you that the market could move either up or down — but as a technical analyst, it was clear that a move below support would be a tougher move than an unobstructed “bounce” upward. That’s especially true when the overall market’s in an uptrend, as it’s been since July.

So, what ultimately happened? Have a look:



Last week’s economic news wasn’t especially out of line with expectations, so not surprisingly, the S&P took the path of least resistance… UP! Another predictable thing to notice about that chart is the point at which last week’s rally stopped: that overhead resistance level I drew at just under 1230.

Keep in mind that those support and resistance levels (the thick horizontal black lines) aren’t new additions to this chart. They’re the same exact lines from the first chart; I drew them weeks ago.


How to Get Rich on “Mobile Royalties”

Apple... Google... Microsoft... and over 200 other companies are pouring cash right now into this “mobile royalty” cash pool. These payouts get bigger with the sale of almost EVERY smartphone, tablet computer, or MP3 player worldwide...




That kind of predictive power is incredibly useful in deciding when to enter and exit your trades. Remember, stocks — including penny stocks — move in conjunction with the broad market. That means that the best time to buy is when the market’s near support and readying for a move higher. (And that’s exactly what I recommended my Penny Momentum Trader readers do in late November — they’re currently up around 50% on my latest recommendation.)

So, what’s in store for stocks to end the year? Taking a look at the S&P chart above, you can see that the index is consolidating right below resistance — again, think about the path of least resistance. It’s very possible that we’ll see another bounce lower toward 1200 in the next few days. That said, with a year-end boost in consumer sentiment, now’s as good a time as ever to see a breakout above 1230. If that happens, expect another rally in stocks…

This time, though, you know what to look for before it happens.

Cheers,
Jonas Elmerraji

P.S.: I’ve developed a penny stock trading system that takes full advantage of those kind of predictable market moves. Like I said, it’s already had the opportunity to put 50% gains in the pockets of my readers. If you want to use it for your own portfolio, click here…

There is a catch, of course… Because it deals exclusively with small-cap stocks, I’m being forced to limit my research to 1% of readers. To make sure you get in, click here while spots are still open.


Check Out This Canadian Penny Stock!

This Canadian penny stock play just won the rights to an estimated $172.5 billion oil bonanza... The profit potential could be enormous for investors who get in early. Resident geologist Byron King has all of the details in this exclusive video presentation. There’s still time to get in...




Chart Smarts: How to Predict a Rally in Stocks is featured at Penny Sleuth.



Research Reports
The Secret $200 Retirement Blueprint

Investing in Penny Stocks

What Is Technical Trading


Penny Sleuth On Twitter Follow the Penny Sleuth on Twitter, here.
Penny Sleuth On Facebook Become a Facebook Fan of The Penny Sleuth, here.
AGORA FInancial

The Penny Sleuth, a free e-letter, offers independent news and commentary on small cap stocks, options and high growth opportunities. We sent this e-mail to KNUMASSCN@gmail.com because you or someone using your e-mail address subscribed to this service.

Are you having trouble receiving your Penny Sleuth? You can ensure its arrival in your mailbox by: Whitelisting Penny Sleuth.


To end your Penny Sleuth e-mail subscription, click: Unsubscribe.


The Penny Sleuth is your free and independent source for analysis, commentary and news on small cap stocks, options and high growth opportunities. At the Penny Sleuth, we give your our 100% independence pledge. That means that we never receive compensation to talk about any stocks we feature. Our editorial staff never owns a position in any of the stocks we mention at the time of publication. And we only recommend stocks that we come across in our own original research. Our pledge also means that we won't collaborate with companies who don't live up to our independence requirements.

Nothing in this e-mail should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

© 2010 Agora Financ ial, LLC. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the World Wide Web), in whole or in part, is strictly prohibited without the express written permission of Agora Financial, LLC. 808 Saint Paul Street, Baltimore MD 21202.

No comments:

Not What You Were Looking For? Try a new Google Web Search