Determine Stocks Level
By Anthony Green
You have seen the elaborate tricks magicians and movie stuntmen perform with knives. They throw them at targets with amazing accuracy, dodge oncoming knives with incredible speed, and stop hurling knives with their bare hands without so much as a nick.
If only investing were so easy.Many times strong stocks begin to fall in price. How do you determine whether the decline in price is over or just the beginning of something much worse to come? We have several ways of determining if a stock is at a support level. Generally once a stock reaches a support level, you will see at least a bounce in the stock, allowing for a slightly better exit point if you�re long the stock. In other cases, a stock in a strong uptrend may just be taking a breather and the pullback to support is a buying opportunity.
Bullish Support Line
The bullish support line is a line drawn at a 45-degree angle from the lowest point on the chart. The point and figure support line is drawn differently from a bar chart support line. The bar chartist draws a support line that connects the low points on the chart as the stock rises. As long as the stock stays above the bullish support line, we say that the main trend is positive. Bullish support lines can remain in effect for several years, and they often act like brick walls. Stocks that pull back to their bullish support lines are usually good buys as investments and trading opportunities. Not only are you buying the stock more cheaply, but also a violation of the bullish support line affords you a close stop-loss point.
Sector Is In The Green Zone
For each sector of the market, we measure the percentage of stocks within that group that are on a point and figure buy signal. This percentage is then plotted on a grid from 0 percent to 100 percent. When the percentage falls to 30 percent or below, we say the sector is in the �green zone.� Most of the people who want out of that sector have already sold. Sometimes a sector may reach a �green zone� only once every year or so, but a visit to this area of the sector bullish percent chart usually represents a very washedout condition with limited downside risk.
Bottom Of The Ten Week Trading Band
Creating a bell curve entails entering data points into a formula one can construct into a statistical bell curve or a range. The same thing can be done with stocks. We have tweaked the standard bell curve formula a bit to include a volatility calculation and then taken ten weeks� worth of data for any stock and created a bell curve for it. The 100 percent oversold level is three standard deviations below normal. When a stock reaches this level on its chart, it suggests the stock is ready for a bounce back to normal on the curve. If a stock is in an overall downtrend, but reaches the bottom of its ten-week trading band, bounces from that area can be used to exit the stock at a better price. If a stock is in an overall uptrend, pullbacks to the bottom of the ten-week trading band are excellent buying opportunities.
About the author
If you want best stock recommendations and useful stock market tips, visit http://www.5minutetrader.com/ for online stock trading manual. from http://www.FreeArticlesAndContent.com
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