This Wednesday - Profits Beyond Predictions: Embracing Surprises
The Master Trader top-down method of stock market analysis is a comprehensive approach that starts with a Techno-Fundamental perspective and narrows to individual stocks.
Master Trader uses a Top-Down method to educate students through courses and letter memberships.
Below is a chart of the Dow Jones daily chart marked with some candle patterns and reference area of a turn or coming turn area.
Marking up charts with your analysis as homework will help you prepare to see your setups in real-time. Every profession requires practice.
When I started my self-education in technical analysis in the late 1980s, there wasn't an internet or programs that automatically put the data on your computer screen for viewing.
There were rudimentary charting programs, and the data needed to be downloaded daily over a phone line through a 2400-baud modem into a folder on your computer.
Then, the data had to be transferred to the charting program using typed DOS commands.
It took an hour or so before you could look at the charts. We've come a long way!
Chart Analysis Homework for Learning
After doing the laborious work needed to start looking at charts, I'd begin an attempt to figure out what I was looking at and how to make money from it.
I spent considerable time using indicators, adjusting settings, drawing trendlines, channels, and other types of technical analysis that I would read or hear about.
Some of it was crazy, but you'll try almost anything when you have little idea what you're doing and want to succeed.
After quite a bit of trial and error, I was at my wit's end and frustrated with trying to figure out why the method had little consistency.
Then, a thought!
The indicator method does not work. What if I remove all the indicators, lines, etc., and see if the prices alone make sense? It did!
Printing Charts and Marking Them Up
In the late 1980s, there weren't candlestick charts. Today, they are everywhere and are very helpful to see the pictures we learn to recognize.
Once I printed a chart or two, I would mark them with the concepts I was learning.
Each concept alone was simple but not a strategy to trade.
Once I combined concepts, the light began to shine, and trading strategies developed.
I would review my many marked-up charts later to see what I missed, and learning continued.
Marking up charts and reviewing them is an excellent exercise, and I suggest you try it
Not just look at the chart. Print it and put a pen on it.
Master Trader Advisory Swing and Options Trader Letter
I don't print out charts daily anymore, but sometimes I do.
However, I continue this exercise in the Master Trader Advisory Swing and Options Trader letter each week.
In one of the sections, I show the chart of the DOW with concepts marked up.
The one below is from the week of 11-6-23 and comments about the recent week.
Subscribers can look at past letters and see the DOW marked up from years past from each week.
I also review many charts in a weekly video of 25 to 30 minutes of what is happening in the markets, sectors, and stocks for review.
Dow Jones Daily Chart
Below is the daily chart of the Dow Jones.
We use acronyms for candlestick patterns.
Below are a few, which I will provide.
Green Bar Ignored (-GBI), Bearish Wide Range Bar (WRB), Topping Tail (TT), Bearish Two Bar Reversal (-180), Bullish Wide Range Bar (+WRB), Major Resistance (MR).
Start Marking Up Your Printed Charts and Make Your Patterns Second Nature! - Practice - Practice.
Above is the Dow Jones Industrial Average chart review for monthly MTS education and information.
The two-bar reversal of the previous Friday's -WRB and Monday's +WRB was powerful, but rarely does it result in a 100% retracement of a decline.
Historically, there would be a sideways consolidation and a retest of the prior low before advancing.
Last week's advance was historically unusual.
Buyers' speed and unbridled enthusiasm have left two unfilled gaps below in the void of support.
The first unfilled gap aligns with the 50- and 200-MAs and will likely be filled this week. The second unfilled gap aligns with the 20-MA in the strength of this move, which supports that gap not being filled soon.
When prices do correct, the 50-MA should move below the 200-MA, and it will be interesting to see if the media will point this out as they typically do.
Based on last week's bullish advance, they may not want to mention the typical well-publicized "Death Cross" that rarely is of value.
If the buyers' enthusiasm continues early this week, take note of the unfilled gap above, where prices are likely to stall.
Below, Sign Up the Advisory Swing and Option Letter at a Huge Discount.
The Advisory Swing and Options Letter shows you how to use Techno-Fundamentals, how to scan sectors, stocks and provides trade ideas. Watch the Video Below from the Week's Letter. New trades with the technical setup and management updates are sent intra-day by text message to subscribers until the trade is closed.
Master Trader and You Building Your Financial Future Together!
Happy trading! If you have any questions or comments, please e-mail Greg Capra at Greg@mastertrader.com or Dan Gibby at Dan@mastertrader.com