Bottoming Stock Formations

About Using the Time Segmented Volume Indicator

One of the tougher technical patterns to determine is when stocks are going to stop trending down and begin bottoming stock formations. This is especially important for Swing Momentum Traders as most bottoms have periods of Momentum action as energy builds up, due to larger lot buying. This is a form of liquidity taking, which triggers High Frequency Trading HFT action and big Velocity runs.

Being able to identify when a stock has reached that final low is often challenging when only using traditional stock indicators and price action. When a Trader incorporates more Volume Indicators a final low can often be identified sooner, allowing for time to prepare for the Velocity runs out of a bottom.

One of the best Hybrid Volume Oscillators to use in order to find the final bottom low is called Time Segmented Volume Indicator TSV, because it has a tendency to show a bottom V, W, or U pattern since it is a line indicator. TSV also oscillates via a center line, which adds additional easy to read patterns for the beginner to novice trader.

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time segmented volume indicator for tc2000 webinar - technitrader

 See chart example below with TSV in the bottom chart window, showing a U Bottom.

chart example with tsv in the bottom chart window showing a "u" bottom - technitrader

The Time Segmented Volume Indicator is particularly strong because it has all 3 pieces of data in the formula, and is a Cumulative Indicator rather than an indicator based on Moving Averages. This empowers the analysis with stronger signals and far more reliable entries for the Momentum trade.

Combining the Time Segmented Volume Indicator with new candlestick patterns such as the “Sandwich Candlestick Pattern” and pre-momentum action, makes it is easy to recognize and allows earlier entries for Swing Traders in bottoming stock formations.

Summary

Adding the Time Segmented Volume Indicator to the analysis of stocks for Swing and Momentum Trading can provide additional signal patterns that give earlier indications of momentum energy building, due to Quiet Accumulation and large lot Professional Traders buying after the accumulation. Professional Traders candle patterns are far more reliable and consistent than trading with Retail Traders and Small Lot Investors, and finding those patterns is easier when you apply this indicator to the analysis.

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Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using a TC2000 chart, courtesy of Worden Bros.

Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
TechniTrader DVDS with every course.

©2016-2017 Decisions Unlimited, Inc. dba TechniTrader.  All rights reserved. 
TechniTrader is also a registered trademark of Decisions Unlimited, Inc.

Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only. 

TC2000 Time Segmented Volume Indicator Webinar

TechniTrader has a NEW TC2000 LEARNING CENTER with 4 webinars available to watch when you Sign Up. The “Time Segmented Volume Indicator WEBINAR” is one of them located at TechniTrader.com and is described below.

screen shot of the time segmented volume indicator webinar - technitrader
This webinar is for all TC2000 Users who want to learn all the new patterns that form on the Time Segmented Volume Indicator TSV due to the Dark Pools, Professional Traders, and High Frequency Trading HFT action.

This powerful Volume Oscillator leads price most of the time, providing earlier entries and exits for higher profits.

TSV patterns signal a bottom has started even before price.

Learn Accumulation, Rotation, and Distribution Patterns for earlier entries and much more. 

Sign Up for full access to the TechniTrader.com Learning Center CLICK HERE TO BEGIN

Trade Wisely,
Martha Stokes CMT

Chartered Market Technician
Instructor and Developer of TechniTrader® Stock and Option Courses
TechniTrader DVDS with every course.

©2016-2017 Decisions Unlimited, Inc. All Rights Reserved.
TechniTrader is the Registered Trademark of Decisions Unlimited, Inc.

Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader its instructors and or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader is not a broker or an investment advisor, it is strictly an educational service.

The Brexit Lesson

England Vote Presented Uncertain Future

England had a historic vote and half the population was ecstatic, believing things would get better overnight while the other half was wondering what it really means for their country.

The reality that will settle in for the British people is that there will be no instant change in terms of economic growth, prosperity, and happier citizens. Instead the future is fraught with more uncertainty than has been present in England since WWII.

Revolutions sound wonderful, until the hard work of adjusting to massive changes begins. For the US Stock Market, the impact will be specific to corporations who are heavily vesting in the United Kingdom or have more than 10% of their revenue income from England.


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Those corporations who do not have a strategic interest in Britain, will continue to grow on their original business cycle path with minimal disruption.

England, being an island nation imports heavily but the US is not its largest import country. 



The US is one of the more important countries for exports for the United Kingdom.


The changes going on in England could potentially cause the British pound to fall in value against the US dollar, making imports cheaper from the UK for US citizens, companies, and corporations.

England Exports:

1. The mainstay of England’s exports are Professional, Scientific, and Technology Services.  As a small island nation, services are a huge part of its economy.

2. Information and Communication Technology are the second largest export from the UK to the US. If the pound loses value which is likely, then these services will be cheaper for US corporations.

3. Financial and Insurance Services are the third largest export. This is a big part of the financial industry, and again lower pound values will make these services less expensive to US corporations, and the financial industry in the US.

However the percentage of UK exports to the US is small by comparison to the  exports to Russia, Canada, India, United Arab Emirates, Germany, China, Hong Kong, and other countries. The US does not import or export heavily with England.

Although the US Stock Market sold off sharply on the day of the news of the Brexit vote passing with a small majority, the overall long term impact will likely be less than many traders and investors believe.  

Watch webinars for trading and investing in the stock market, leading and popular indicators, as well as a wide variety of other topics on my main website at TechniTrader.com.

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The hardship will be felt mostly in England as the total reinvention of their economy, financial system, Trade Agreements with other countries, Treaties, and standing in the world will be changing slowly over a far more extended period of time than many British may realize.

Summary

Change is exciting to imagine, but in reality change of this magnitude is always much harder with many surprises, disappointments, and challenges.

Most US companies are well postured to weather the storm of news media hype which inspires panic, fear, greed, and volatility in the markets. After the people of the world tire of this story, the markets will return to the underlying fundamental values that drive economies worldwide.

Want deeper detailed facts about the British Brexit Vote? How it could impact your held stocks? TechniTrader will email you a courtesy PDF file packed with specifics of the magnitude, long lasting and far reaching effect this vote presents.

For extensive research by Martha Stokes CMT go to TechniTrader & Sign Up, then in the Sign Up window text box request “Brexit PDF.”

Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using a TC2000 chart, courtesy of Worden Bros.

Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
TechniTrader DVDS with every course.

©2016-2017 Decisions Unlimited, Inc. dba TechniTrader.  All rights reserved. 
TechniTrader is also a registered trademark of Decisions Unlimited, Inc.

Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only. 

Contrarian Patterns Warn a Top is Coming

Using Leading Indicators for Beginners Review
Often for beginners the Stock Market reversing and heading down into a correction is a complete surprise or shock. They are not expecting the turn, nor are they prepared for it. Fortunately for Retail Traders there are plenty of indicators that can warn of a top before it actually occurs. These can be Contrarian Patterns.
A Contrarian Pattern is simply something that is moving in opposition to price. In other words, using Leading Indicators that expose selling while price is still moving up. This is one of the key elements to avoiding getting into a stock and then having it reverse on you, and sell down as you take a loss.
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"Stock Leading Indicators Webinar"

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In the candlestick chart example below the Leading Indicator called Balance Of Power in the bottom chart window, exposes whether giant to large lot institutions are buying or selling. It is showing red bars, which means the giant Institutions are selling or rotating out of this stock however price still climbs upward. These contrarian patterns warn a Top is coming.

candlestick chart example with a contrarian pattern showing a warn a top is coming - technitrader


Many Retail Traders wonder how this can be. If giant Institutions are selling or rotating quietly out of a stock, how can price continue upward?
What drives price upward is demand AND types of orders. If smaller lots are buying “At Market” which is the most common way for new Independent Investors to buy a stock, then price will continue higher so long as the giant Institutions are careful about not selling too many shares all at once. In this instance the red bars in the Leading Indicator Balance of Power warns this is a period of Quiet Rotation, and that the stock is at risk of a Topping Formation.
There are a couple of days of green BOP but that is far fewer than the red, and at the wrong price level for giant Institutions to be buying. They prefer to buy in at a bottom using Dark Pools, so this is speculative Smaller Funds buying at the wrong time. Then a huge High Frequency Trader HFT sell off starts, those with smaller lots panic and Small Funds sell causing Balance of Power to have long red bars.

Summary
Contrarian Patterns in Leading Indicators help to see what is going on. Remember there are 9 Market Participant Groups and each has their own agenda, way of buying or selling, order type, capital base, and experience. The more you understand how each group trades, the better you will become with your personal trading.
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"Stock Leading Indicators Webinar"

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Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using TC2000 charts, courtesy of Worden Bros.

Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
TechniTrader DVDS with every course.

©2016 Decisions Unlimited, Inc. dba TechniTrader.  All rights reserved. 
TechniTrader is also a registered trademark of Decisions Unlimited, Inc.

Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only. 

About Swing/Velocity Trading Exits

How Resistance and Support Effect Runs

Before you ever enter a Swing Trade whether it is buying or selling short, you must evaluate the Market Condition and the strength of the action. Velocity moves are ideal for Swing Trading in an Uptrending Market.

As a Swing or Day Trader you want price to move rapidly with sufficient room before a retracement will occur. Swing Trades will retrace at moderate to strong resistance, and will bounce at moderate to strong support. Watch a unique webinar specifically about Swing Trading.
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The only time a Swing Trade will move beyond moderate support, is when the Price action has plenty of Velocity. How to anticipate if Price will retrace, bounce, or move beyond resistance or support is by using price action to volume action analysis. 

The chart example below shows a Swing Trade candlestick pattern.

stock chart example Momentum Run - technitrader

As Price rises in this Momentum Run then Volume Bars should run up also, so that they are rising above the previous day’s Volume Bar as Price moves up nicely.

A Swing Trader in this stock would want to check intraday charts, to find a tight intraday stop loss. This would protect profits on these long white candlestick days, with increasing Volume that signals there is Velocity in the Price action. As it nears resistance, Volume plays an ever increasingly important role. To overcome strong resistance, Volume needs to continue to increase.

A good Swing/Velocity Trading Exit strategy would be to keep tightening up stops as Price moves up, if Volume is not dropping back and the market is still moving up overall.

As long as Volume is increasing, tightening stops is a good exit strategy for Swing Traders. If a Resting Day Candlestick forms, then continuing to hold with a tight stop can reap more profits. If Volume begins to taper off, then a Sell At Market SAM order is something to consider.

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Summary

Each Swing Trade is different as each stock moves differently depending on the Market Participant Groups trading that stock. If the market is trending strongly after a period of Platform building, then stocks can blast through weak to moderate resistance on a momentum move. If the market is weak or uncertain, then Swing Trades will stall or retrace at moderate resistance.

Remember that the goal of Swing Trading is fast in and out, and not holding through any kind of retracement at all. If the stock is not moving as expected, the rule is not to hold the Swing Trade. Resting Days are fine to hold through, but retracements are not.

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Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using a TC2000 chart, courtesy of Worden Bros.

Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
TechniTrader DVDS with every course.

©2016 Decisions Unlimited, Inc. dba TechniTrader.  All rights reserved. 
TechniTrader is also a registered trademark of Decisions Unlimited, Inc.

Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only. 

Worden Leading Indicator Balance of Power

Changes to Market Structure Alter Indicator Interpretation

TC2000 users have a huge advantage over other Retail Traders as they have the power of Worden Indicators at their disposal. However recent changes to the Market Structure have altered how Traders should interpret these indicators.This is because of the changes to how large lots buy and sell stocks, the various Market Participant Groups who use large lots, and the Order Types available to them.

One of the most common mistakes when using Balance of Power is to assume that long red bars represent distribution. This is a highly oversimplified analysis of one of the most powerful indicators ever written. Watch a webinar specifically for interpreting and using the Balance of Power indicator.
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To use Balance of Power properly Traders must also analyze the following:

1. Where in the trend is Balance of Power showing color or is it neutral gray
2. How long are the bars and the length of time they are a color
3. The relationship between price patterns and Balance of Power bars
4. Liquidity and shares traded
5. The current Market Condition

Here is a chart example with an explanation of how to properly use the Worden Indicator Balance of Power, which is in the bottom chart window. The indicator signal may look totally off track, but that is simply because you may not know how to read this indicator. Let me take you step by step, by first noticing the Trend. This stock has been in its own bearish Downtrend for a year now, and a Weekly Chart View shows the classic top.

weekly chart view shows the classic top - technitrader

Also see that it is at a prior low, and that Balance of Power had a lot of red bars that turned gray recently over the past couple of weeks. This is NOT distribution. This is the final capitulation selling by Smaller Funds who trade very similarly to the retail crowd, because they have a lack of technical education and their Volume Weighted Average Price orders trigger AFTER a High Frequency Trader Volume spike. 

I have noted the Volume spike on the chart for you with a red arrow. High Frequency Trader downside action with high Volume, triggers automated Volume Weighted Average Price orders which are overly popular with Small Funds Managers. They accidentally are SELLING, against the giant lot Institutions who are buying.

Note also on this Weekly Chart View, that Volume is LOWER during the capitulation period and rising as giant lot Institutions start buying in Dark Pools.

Now let’s look at the Daily Chart View for the same stock.

chart example with huge HFT order spike on volume turning into BOP RED and long - technitrader

It is easy to see the huge High Frequency Trading order spike on Volume, which also turns Balance of Power bars RED and long.

Look at the relationship between price action after the High Frequency Trader Volume. See how Balance of Power has a “Shift of Sentiment™” pattern as the Dark Pools quietly accumulate shares, as Smaller Funds are dumping. Giant lot orders are firing off as the Smaller Fund Volume Weighted Average Price orders, sell into the Dark Pool Buy Zone™ of the giant Institutions buying.

This slowly shortens the indicator bars, AND turns them gray. Always use gray bars not yellow bars as the neutral color for this indicator. Gray is commonly a neutral color, while yellow usually means caution. You should not be reacting cautiously at this point.

The “Balance of Power” which is what this indicator is named after, suddenly stops the downtrend and begins the Bottoming Formation. Watch a webinar on Trade Management Planning which includes determining personal share lot size, how many trades are needed to meet goals, number of stocks to trade, risk tolerance, and price range for tradng and investing.

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Once you understand how to read this indicator, it is easy to find excellent stocks to trade that will have sudden Momentum Runs out of a Bottom Formation action. Why does momentum occur after Dark Pools have been quietly accumulating? 

The answer is because giant Buy Side Institutions use Time Weighted Average Price orders to incrementally buy huge share lots of the stock. They are liquidity takers, not liquidity makers. So Professional Traders and High Frequency Traders can discover this liquidity decline, and react by trading the stock up suddenly causing momentum action that YOU can trade.

Summary

The Worden Indicator Balance of Power is one of the most powerful indicators available to Retail Traders. Usually this type of highly sophisticated indicator is only available to Professional Traders using proprietary trading platforms. It has changed over the years as the market has changed. Learning to read the new patterns is not difficult, but it is very important. Knowing where the Dark Pools are accumulating, can help Traders find excellent momentum stock picks BEFORE price begins to run.
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Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using a TC2000 chart, courtesy of Worden Bros.

Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
TechniTrader DVDS with every course.

©2016 Decisions Unlimited, Inc. dba TechniTrader.  All rights reserved. 
TechniTrader is also a registered trademark of Decisions Unlimited, Inc.

Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.