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Hello Fellow Chart Watchers!
Don't do it! I can tell you are thinking about it: "Thursday's late
recovery and Friday's rally must signal the bottom. Now must be the perfect
time to get back into some low priced tech stocks, right?" Wrong!
It always find it funny how the same people who wait patiently for
confirmation before selling a stock will often jump back in the market at
the first sign of an upturn. They act as if being in cash is more painful
than holding losing stocks. Experienced chart watchers know that calling
tops and bottoms is next to impossible, but riding confirmed trends can be
done very successfully if you have patience. Let's turn an unemotional eye
to the current market charts:
One day does not an uptrend make. You need at least two (preferably three)
reversals on a price chart - each one higher than the last - to define an
uptrend. The charts above clearly show confirmed downtrends and support
breakdowns across the board. Now is not the time to buy.
"But what about (some random indicator)? It's signalling a bottom, right?"
Wrong! Constrained oscillators can be very misleading at times like this.
Because of the way they are calculated, it is very difficult for them to
move below a certain level. Look at the performance of the RSI for example.
Despite a huge drop in the Dow last week, the Dow's RSI barely budged.
Below a certain level, constrained oscillators will more likely move
sideways or even upward as the underlying stock continues to decline. Don't
be fooled!
Now is also a great time to review the last two of Richard Rhodes' Trading
Rules:
Number 17: "Markets form their tops in violence; market form their lows
in quiet conditions." Last week's price action was certainly not quiet,
was it?
Number 18: "...the first 50% of the price movement will take 90% of the
time and will require the most backing and filling..." This means that
there will be plenty of time to find a good entry point when the market
really does turn. Patiently waiting for confirmation is the key.
Did You Know?
Our busiest times of the week are usually Monday and Tuesday mornings from
10:30AM to 12:00PM Eastern. There is another spike in activity from 9PM to
11PM Eastern each evening.
During those times we serve over 600 SharpCharts each minute.
The average size of each chart was just over 12,000 bytes. The largest
chart we served last week was over 80,000 bytes.
It typically takes us less than 0.3 seconds to create a SharpChart. 99% of
our charts were created in under 2.0 seconds.
Saturdays and Sundays are only 1/3rd as busy as weekdays.
HonorSystem contributions have fallen off dramatically. Last week's
donations covered only 10% of the cost of our internet connection.
There are now over 15,000 subscribers to this newsletter!
Site News
Time For Yet Another Survey!
Thanks to everyone who filled out last week's survey about discussion
boards. The results are presented below. We've got another survey for you
this week that may be even more important - "What are the features that we
should add to the site next?" Here's your chance to directly influence our
future direction! Click here to take our new survey!
Annotated SharpCharts are Coming!
They are still a couple of weeks away, but I wanted to give you a sneak
peak at our new Chart Annotation applet. This Java-based program will let
you add trendlines, shapes, text, callouts, support/resistance lines, and
much more to our award-winning SharpCharts! Here's a screenshot of what it
will look like:
Discussion Board Survey Results
As we suspected, many of you don't trust financial message boards,
especially if they are full of spam. However, many of you also indicated
that you'd like to see a well run discussion board dedicated to Technical
Analysis and full of annotated charts. Based on this input, we plan on
gradually rolling out a collection of moderated boards and threads that
will reward well-reasoned contributions and strongly discourage spam and
off-topic chatter. Stay tuned!
Improved Scan Results
Next week, we'll roll out an improved collection of CandleStick scans
(reviewed by Greg Morris himself!) as well as a "Scan Summary" page that
will show you, in one easy to read table, how many stocks each one of our
scans has found each day. Watch the "What's New" section on our homepage
for the announcement.
John Murphy's Market Watch
VIX Signalling Short-Term Bottom
CONTRARY INDICATOR. . . We use the CBOE Volatility Index (VIX) as a
contrary indicator to help measure market extremes. VIX trends in the
opposite direction of the stock market. It's good for the market when VIX
is falling, and bad when it's rising. The levels of VIX are important as
well. Readings under 20 are often associated with market tops. Readings
over 40 are often associated with market bottoms.
VIX REACHES 40. . . The last major turn came around last Labor Day when the
VIX turned up from under 20 - and correctly signaled the end of the summer
rally and the start of a new downleg in the market. The VIX got above 40 on
Thursday and fell sharply on Friday. The last time the VIX reached 40 was
last April - just before the time that the market started its summer rally.
We don't use the VIX for long-term forecasting. However, its current
reading does increase the odds that the recent downswing has reached a
level where a technical bounce is more likely.
If you like John Murphy's commentary, visit his website to learn how to
receive it on a daily basis.
Remember: You must be on-line (connected to the internet) to see the charts
and images in this newsletter!
Are You New To StockCharts.com?
Here are some links that should help you get started:
A Quick Tour of the Site
John Murphy's 10 "Laws" of Technical Trading
Chip's Thoughts on Getting Started with Technical Analysis
All About Charting and Technical Analysis
A Glossary for Common Technical Analysis Terms
Bored? Check out our SharpCharts Voyeur page to see recent masterpieces
that other users created on StockCharts.com
Help Us Out!
Did you know that the best way you can help StockCharts.com is by
recommending us to a friend? We need your help to spread the word about our
site by forwarding this newsletter to everyone you know. You can also help
by visiting our advertisers and by doing all of your Amazon.com shopping
via the links on our website. Finally, if you want to contribute directly
to "the cause", you can now do so via the "Honor System" box located on our
homepage (and in this newsletter). Last month, Honor System contributions
covered 80% of our internet connection costs! Thanks, we appreciate
everyone's support no matter what form it takes!
Questions? Comments? Concerns? Problems? Suggestions? Simply 'r'eply to
this email message and I'll see what I can do.
Take care,
Chip
ABOUT YOUR SUBSCRIPTION: You are receiving this mailing because your email
address was entered into the subscription form on our web site. To
unsubscribe, or to switch between our HTML version and the Plain Text
version, use the form on our Subscriber page.
If you have any problems, simply 'r'eply to this email and I'll try to fix
things by hand.
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To: <cwwHTML@xxxxxxxxxxxxxxx>
Subject: T2K "Chart Watchers Weekly" (HTML Version) for 24 March 2001
From: Chip Anderson <chipa@xxxxxxxxxxxxxxx>
Date: Sat, 24 Mar 2001 18:22:28 -0800
Delivered-To: mailing list traders2000@xxxxxxxxxxxxxxx
List-Unsubscribe: <mailto:traders2000-unsubscribe@xxxxxxxxxxxxxxx>
Mailing-List: list traders2000@xxxxxxxxxxxxxxx; contact traders2000-owner@xxxxxxxxxxxxxxx
Reply-To: chipa@xxxxxxxxxxxxxxx
Sender: chipa@xxxxxxxxxxxxxxx
Title: Chart Watchers Weekly - 24 March 2001
StockCharts.com's Weekly Summary of Market Trends, Signals and Changes
24 March 2001
Hello Fellow Chart Watchers!
Don't do it! I can tell you are thinking about it: "Thursday's late recovery and Friday's rally must signal the bottom. Now must be the perfect time to get back into some low priced tech stocks, right?" Wrong!
It always find it funny how the same people who wait patiently for confirmation before selling a stock will often jump back in the market at the first sign of an upturn. They act as if being in cash is more painful than holding losing stocks. Experienced chart watchers know that calling tops and bottoms is next to impossible, but riding confirmed trends can be done very successfully if you have patience. Let's turn an unemotional eye to the current market charts:
One day does not an uptrend make. You need at least two (preferably three) reversals on a price chart - each one higher than the last - to define an uptrend. The charts above clearly show confirmed downtrends and support breakdowns across the board. Now is not the time to buy.
"But what about (some random indicator)? It's signalling a bottom, right?" Wrong! Constrained oscillators can be very misleading at times like this. Because of the way they are calculated, it is very difficult for them to move below a certain level. Look at the performance of the RSI for example. Despite a huge drop in the Dow last week, the Dow's RSI barely budged. Below a certain level, constrained oscillators will more likely move sideways or even upward as the underlying stock continues to decline. Don't be fooled!
Now is also a great time to review the last two of Richard Rhodes' Trading Rules:
Number 17: "Markets form their tops in violence; market form their lows in quiet conditions." Last week's price action was certainly not quiet, was it?
Number 18: "...the first 50% of the price movement will take 90% of the time and will require the most backing and filling..." This means that there will be plenty of time to find a good entry point when the market really does turn. Patiently waiting for confirmation is the key.
Did You Know?
Our busiest times of the week are usually Monday and Tuesday mornings from 10:30AM to 12:00PM Eastern. There is another spike in activity from 9PM to 11PM Eastern each evening.
During those times we serve over 600 SharpCharts each minute.
The average size of each chart was just over 12,000 bytes. The largest chart we served last week was over 80,000 bytes.
It typically takes us less than 0.3 seconds to create a SharpChart. 99% of our charts were created in under 2.0 seconds.
Saturdays and Sundays are only 1/3rd as busy as weekdays.
HonorSystem contributions have fallen off dramatically. Last week's donations covered only 10% of the cost of our internet connection.
There are now over 15,000 subscribers to this newsletter!
Site News
Time For Yet Another Survey!
Thanks to everyone who filled out last week's survey about discussion boards. The results are presented below. We've got another survey for you this week that may be even more important - "What are the features that we should add to the site next?" Here's your chance to directly influence our future direction! Click here to take our new survey!
Annotated SharpCharts are Coming!
They are still a couple of weeks away, but I wanted to give you a sneak peak at our new Chart Annotation applet. This Java-based program will let you add trendlines, shapes, text, callouts, support/resistance lines, and much more to our award-winning SharpCharts! Here's a screenshot of what it will look like:
Discussion Board Survey Results
As we suspected, many of you don't trust financial message boards, especially if they are full of spam. However, many of you also indicated that you'd like to see a well run discussion board dedicated to Technical Analysis and full of annotated charts. Based on this input, we plan on gradually rolling out a collection of moderated boards and threads that will reward well-reasoned contributions and strongly discourage spam and off-topic chatter. Stay tuned!
Improved Scan Results
Next week, we'll roll out an improved collection of CandleStick scans (reviewed by Greg Morris himself!) as well as a "Scan Summary" page that will show you, in one easy to read table, how many stocks each one of our scans has found each day. Watch the "What's New" section on our homepage for the announcement.
John Murphy's Market Watch
VIX Signalling Short-Term Bottom
CONTRARY INDICATOR. . . We use the CBOE Volatility Index (VIX) as a contrary indicator to help measure market extremes. VIX trends in the opposite direction of the stock market. It's good for the market when VIX is falling, and bad when it's rising. The levels of VIX are important as well. Readings under 20 are often associated with market tops. Readings over 40 are often associated with market bottoms.
VIX REACHES 40. . . The last major turn came around last Labor Day when the VIX turned up from under 20 - and correctly signaled the end of the summer rally and the start of a new downleg in the market. The VIX got above 40 on Thursday and fell sharply on Friday. The last time the VIX reached 40 was last April - just before the time that the market started its summer rally. We don't use the VIX for long-term forecasting. However, its current reading does increase the odds that the recent downswing has reached a level where a technical bounce is more likely.
If you like John Murphy's commentary, visit his website to learn how to receive it on a daily basis.
Remember: You must be on-line (connected to the internet) to see the charts and images in this newsletter!
Are You New To StockCharts.com?
Here are some links that should help you get started:
A Quick Tour of the Site
John Murphy's 10 "Laws" of Technical Trading
Chip's Thoughts on Getting Started with Technical Analysis
All About Charting and Technical Analysis
A Glossary for Common Technical Analysis Terms
Bored? Check out our SharpCharts Voyeur page to see recent masterpieces that other users created on StockCharts.com
Help Us Out!
Did you know that the best way you can help StockCharts.com is by recommending us to a friend? We need your help to spread the word about our site by forwarding this newsletter to everyone you know. You can also help by visiting our advertisers and by doing all of your Amazon.com shopping via the links on our website. Finally, if you want to contribute directly to "the cause", you can now do so via the "Honor System" box located on our homepage (and in this newsletter). Last month, Honor System contributions covered 80% of our internet connection costs! Thanks, we appreciate everyone's support no matter what form it takes!
Questions? Comments? Concerns? Problems? Suggestions? Simply 'r'eply to this email message and I'll see what I can do.
Take care,
Chip
ABOUT YOUR SUBSCRIPTION: You are receiving this mailing because
your email address was entered into the subscription form on our
web site. To unsubscribe, or to switch between our HTML version and the
Plain Text version, use the form on our Subscriber page.
If you have any problems, simply 'r'eply to this email and
I'll try to fix things by hand.
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