In the short-term stock prices are ruled by market emotion. In the long-term prices tend to converge with sound fundamental values. Warren Buffett v. Dividends introduces investors to the concept of Margin of Safety.
The dividend value calculator demonstrates the importance of dividends and the PEG ratio, in determining fundamental values.
November 14, 2002
Understanding the Trading Diary provides further guidance.
The Nasdaq Composite Index opened on a gap to close at 1411, up 3.7%. The primary trend will reverse (up) if the index breaks above 1426.
The S&P 500 gained 22 points to close at 904. The primary trend will complete a double bottom reversal if it rises above 965.
The Chartcraft NYSE Bullish % Indicator signals a bull alert at 40% (November 12).
London-based bank HSBC it to expand into the US, buying consumer finance company Household International for $US 14 billion.
Intel breaks 3Gig
Intel boosts the tech market with a new 3.06 Gigahertz chip and announces a 480 million share buyback. (more)
New York: Spot gold is down 100 cents at $US 317.80.
Day  of the correction took out the previous low at . Days ,  and  have posted equal highs, respecting the low of day , and the index appears set to test the October low.
The primary trend will reverse if the index rises above 3150.
The MACD (26,12,9) and Slow Stochastic (20,3,3) are below their signal lines, while Twiggs money flow signals distribution.
Last covered on November 12:
A rise above the high of day  will be a bullish entry signal; closing of the gap to 11.27, even stronger.
A break below support at 10.92 would be a bearish signal; a break below the low of 10.37 at  would be even stronger.
NCP has managed to produce both bull and bear signals within the space of two days: day  closed the previous gap and  reversed below support, activating the stop below 10.92. As an 8-year old, my soccer coach taught us the drill: "When in doubt - kick it out!" The same applies to trading: if your trade is not going according to plan - get out.
As Edwin Lefevre's says: "there is no profit in being wrong at any time".
A rally above the high of  will be a bull signal. A fall below the low of  would be a bear signal.
Last covered on October 30:
The safest entry point will be if a pull-back is of short duration and respects the 7.65 support line.
The pull-back after  broke the 7.65 support line but was still a valid entry point, rallying the next day to 8.00. The long shadow at  and two successive inside days forewarn of the weak rally at . The pull-back is on weak volume until buying support enters at . The pattern is now shaping as a bull trap with sellers having overcome support at .
Further downward movement, below the low of , will be a strong bear signal, while a rise above 7.65 would be bullish.
trade what you know.
- Bill McLaren
In other words, don't trade every pattern in the market
- trade the ones that you know and trust.