>>what price will VVUS be qualified for a Nasdaq delist ? <<
Arent you looking too far ahead here?? There is no chance VVUS will go under here.. The lowest it will get to is around 4. Anything under 5 is considered a penny stock and not worth serious consideration. Unless its LOCK.
Bar Charts (The Meaning of)
Opening Price - The opening price of a daily or a weekly bar usually reflects the amateurs' opinion of value. They read the morning papers, find out what happened the day before, and call their brokers with day orders before going to work. Amateurs are especially active early in the day and early in the week. In bull markets, prices often make their low for the week on Monday or Tuesday on profit taking by amateurs, then rally to a new high on Thursday or Friday. In bear markets, the high for the week is often set on Mondays or Tuesday, with a new low toward the end of the week, on Thursday or Friday.
Closing Prices - The closing prices of daily and weekly bars tend to reflect the action of professional traders. They watch the markets throughout the day, respond to changes, and become especially active near the close. many of them take profits at that time to avoid carrying trades overnight. Professionals as a group usually trade against the amateurs. They tend to buy lower openings, sell short higher openings, and unwind their positions as the day goes on. Traders need to pay attention to the relationship between opening and closing prices. If prices closed higher than they opened, then market professionals were probably more bullish than amateurs. If prices closed lower than they opened, then market professionals were probably more bearish than amateurs. It pays to trade with the professionals and against the amateurs.
The closing tick of each Bar - reveals the outcome of a battle between bulls and bears during that bar. If prices close near the high of the daily bar, it shows that the bulls won the day's battle. If prices close near the low of the day, it shows that bears won the day.
The distance between the high and the low - of any bar reveals the intensity of conflict between bulls and bears. An average bar marks a relatively cool market. A bar that is only half as long as the average reveals a sleepy, disinterested market. A bar that is two times taller then average shows a boiling market where bulls and bears battle all over the field. Tall bars are good for taking profits.
Support and Resistance - A ball hits the floor and bounces. It drops after it hits the ceiling. Support and resistance are like a floor and a ceiling, with prices sandwiched between them. Understanding support and resistance is essential for understanding price trends and chart patterns. Rating their strength helps you decide whether the trend is likely to continue or reverse.
Support - is a price level where buying is strong enough to interrupt or reverse a downtrend. When a downtrend hits support, it bounces like a diver who hits the bottom and pushes away from it. Support is represented on a chart by a horizontal or near-horizontal line connecting several bottoms.
Resistance - is a price level where selling is strong enough to interrupt or reverse an up-trend. When an up-trend hits resistance, it stops or tumbles down like a man who hits his head on a branch while climbing a tree. resistance is represented on a chart by a horizontal or near-horizontal line connecting several tops.
Drawing support and Resistance lines - It is better to draw support and resistance lines across the edges of congestion areas instead of extreme prices. The edges show where masses of traders have changes their minds, while extreme points reflect only panic among the weakest traders. Minor support or resistance tends to pause, while major support or resistance causes them to reverse. Traders buy at support and sell at resistance, making their effectiveness a self-fulfilling prophecy.
Memories, Pain and Regret - Support and resistance exist because people have memories. Our memories prompt us to buy and sell at certain levels. Buying and selling by crowds of traders creates support and resistance. Support and resistance exist because masses of traders feel pain and regret. Traders who hold losing positions feel intense pain. Losers are determined to get out as soon as the market gives them another chance. Traders who missed an opportunity feel regret and also wait for the market to give them a second chance. Feelings of pain and regret are mild in trading ranges where swings are small and losers don't get hurt too badly. Breakouts from trading ranges create intense pain and regret. When the market stays flat for a while, traders get used to buying at the lower edge of the range and shorting at the upper edge. In up-trends, bears who sold short feel pain and bulls feel regret that they did not buy more. Both feel determined to buy if the market gives them a second chance. The pain of bears and regret of bulls make them ready to buy, creating support during reactions in an up-trend. Resistance is an area where bulls feel pain, bears feel regret, and both are ready to sell. When prices break down from a trading range, bulls who bought feel pain, feel trapped, and wait for a rally to let them get out even. Bears regret that they have not shorted more and wait for a rally to give them a second chance to sell short. Bulls' pain and bears' regret create resistance - a ceiling above the market in downtrends. The strength of support and resistance depends on the strength of feelings among the masses of traders.
Strength of Support and Resistance - A congestion area that has been hit by several trends is like a cratered battlefield. Its defenders have plenty of cover, and an attacking force is likely to slow down. The longer prices stay in a congestion zone, the stronger the emotional commitment of bulls and bears to that area. When prices approach that zone from above, it serves as support. When prices rally to it from below, it acts as resistance. A congestion area can reverse its role and serve as either support or resistance. The strength of every support and resistance zone depends on three factors: its length, its height, and the volume of the trading that has taken place in it. You can visualize these factors as the length, the width and the depth of a congestion zone. The longer the support or resistance area - its length of time or number of hits it took - the stronger it is. The taller the support zone, the stronger it is. The greater the volume of trading in a support and resistance zone, the stronger it is.
Trading rules for Support and Resistance
Whenever the trend you are riding approaches support or resistance, tighten your protective stop. A protective stop is an order to sell below the market when you are long or to cover shorts above the market when you are short. This stop protects you from getting badly hurt by an adverse market move. A trend reveals its health by how it acts when it hits support or resistance. If it is strong enough to penetrate that zone, it accelerates, and your tight stop is not touched. If a trend bounces away from support or resistance, it reveals its weakness. In that case, your tight stop salvages a good chunk of profits.
Support and resistance are more important on long-term charts than on short-term charts. Weekly charts are more important than dailies. A good trader keeps an eye on several time frames and defers to the longer one. If the weekly trend is sailing through a clear zone, the fact that the daily trend is hitting resistance is less important. When a weekly trend is hitting support or resistance, you should be more inclined to act.
Support and resistance levels are useful for placing stop-loss and protect-profit orders. The bottom of a congestion area is the bottom line of support. If you buy and place your stop below that level, you give the up-trend plenty of room. More cautious traders buy after an upside breakout and place a stop in the middle of a congestion area. A true upside breakout should not be followed by a pullback into the range, just as a rocket is not supposed to sink back to its launching pad. Reverse the procedure in downtrends.
True and False Breakouts - Markets spend more time in trading ranges than they do in trends. Most breakouts from trading ranges are false breakouts, (false breakouts can typically be avoided by making sure the breakout occurs on high volume.) They suck in trend-followers just before prices return to the trading range. A false breakout is the bane of amateurs, but professional traders love them.
Professionals expect prices to fluctuate without going very far most if the time. They wait until an upside breakout stops reaching new highs or a downside breakout stops making new lows. Then they pounce - they fade the breakout (trade against it) and place a protective stop at the latest extreme point. It is a very tight stop, and their risk is low, while there is a big profit potential from a pullback into the congestion zone. The risk/reward ratio is so good that professionals can afford to be wrong half the time and still come out ahead of the game. The best time to buy an upside breakout on a daily chart is when your analysis of the weekly chart suggests that a new up-trend is developing. True breakouts are confirmed by heavy volume, while false breakouts tend to have light volume. True breakouts are confirmed when technical indicators reach new extreme highs or lows in the direction of the trend, while false breakouts are often marked by divergence's between prices and indicators.
Volume - The Neglected Essential
Volume - represents the activity of traders and investors. Each unit of volume in the market reflects the action of two persons: One trader sells a share and another buys a share. Daily volume is the number of shares traded in one day. Traders usually plot volume as a histogram - vertical bars whose height reflects each day's volume. They usually plot it underneath prices. Changes in volume show how bulls and bears react to price swings. Changes in volume provide clues as to whether trends are likely to continue or to reverse. Professional traders know that analyzing volume can help them understand markets deeper and trade better.
Crowd Psychology - Volume reflects the degree of financial and emotional involvement, as well as pain, of market participants. A trade begins with a financial commitment by two persons. The decision to buy or sell may be rational, but the act of buying or selling creates an emotional commitment in most people. Buyers and sellers crave to be right. They scream at the market, pray, or use lucky talismans. Volume reflects the degree of emotional involvement among traders.
Each tick takes money away from losers and gives it to winners. When prices rise, longs make money and shorts lose. When prices fall, shorts gain and longs lose. Winners feel happy and elated, while losers feel depressed and angry. Whenever prices move, about half the traders are hurting. When prices rise bears are in pain, and when prices fall, bulls suffer. The greater the increase in volume, the more pain in the market.
Traders react to losses like frogs in hot water. If you throw a frog into a boiling kettle, it will jump in response to sudden pain, but if you put a frog into cool water and heat it slowly, you can boil it alive. If a sudden price change hits traders, they jump from pain and liquidate losing positions. The same losers can be very patient if their losses increase gradually.
Who buys from a trader who sell his losing position? it may be a short seller taking profits and covering shorts. It may be a bargain hunter who steps in because prices are "too low". that bottom-picker assumes the position of a loser who washed out - and he either catches the bottom or becomes the new loser.
Who sells to a trader who buys to cover his losing short position? It may be a savvy investor who takes profits on his long position. It also may be a top-picker who sells short because he thinks that prices are "too-high." He assumes he position of a loser who covered his shorts, and only the future will tell whether he is right or wrong.
When shorts give up during a rally, they buy to cover and push the market higher. Prices rise, flush out even more shorts, and the rally feeds on itself. When longs give up during a decline, they sell and push the market lower. Falling prices flush out even more longs, and the decline feeds on itself. Losers who give up propel trends. A trend that moves on steady volume is likely to continue. Steady volume shows that new losers replace those who wash out. Trends need a fresh supply of losers the way builders of the ancient pyramids needed a fresh supply of slaves.
Falling volume shows that the supply of losers is running low and a trend is ready to reverse. It happens after enough losers catch on to how wrong they are. Old losers keep bailing out, but fewer new losers come in. Falling volume gives a sign that the trend is about to reverse.
A burst of extremely high volume also gives a signal that a trend is nearing its end. It shows that masses of losers are bailing out. You can probably recall holding a losing trade longer than you should have. Once the pain becomes intolerable and you get out, the trend reverses and the market goes the way you expected, but without you! This happens time and again because most amateurs react to stress similarly and bail out at about the same time. Professionals do not hang in while the market beats them up. They close losing trades fast and reverse or wait on the sidelines, ready to re-enter.
Volume usually stays low in trading ranges because there is relatively little pain. People feel comfortable with small price changes, and trendless markets seem to drag on forever. A breakout is often marked by a dramatic increase in volume because losers run for the exits. A breakout on low volume shows little commitment to a new trend. It indicates that prices are likely to return to their trading range.
Rising volume during a rally shows that more buyers and short sellers are pouring in. Buyers are eager to buy even if they have to pay up, and shorts are eager to sell to them. Rising volume shows that losers who leave are being replaced by a new crop of losers.
When volume shrinks during a rally, it shows that bulls are becoming less eager, while bears are no longer running for cover. The intelligent bears have left long ago, followed by weak bears who could not take the pain. Falling volume shows that the fuel is being removed from the up-trend and it is ready to reverse.
When volume dries up during a decline, it shows that the bears are less eager to sell short, while bulls are no longer running for the exits. The intelligent bulls have sold long ago, and the weak bulls have been shaken out. Falling volume shows that the remaining bulls have higher level of pain tolerance. Perhaps they have deeper pockets or bought later in the decline, or both. Falling volume identifies an area in which a downtrend is likely to reverse. This reasoning applies to long an short time frames. As a rule of thumb, if today's volume is higher than yesterday's volume, then today's trend is likely to continue.
Trading Rules - The terms "high volume" and "low volume" are relative. As a rule of thumb, "high volume" for any given market is at least 25 percent above the average for the past two weeks, and "low volume" is at least 25 percent below average.
"High volume" confirms trends. if prices rise to a new peak and volume reaches a new high, then prices are likely to retest or exceed that peak.
If the market falls to a new low and the volume reaches a new high, that bottom is likely to be retested or exceeded. A "climax bottom" is almost always retested on low volume, offering an excellent buying opportunity.
If volume shrinks while a trend continues, that trend is ripe for a reversal. When a market rises to a new peak on lower volume that its previous peak, look for a shorting opportunity. This technique does not work as well at market bottoms because a decline can persist on low volume. There is a saying on Wall Street: "It takes buying to put stocks up, but they can fall on their own weight."
Watch volume during reactions against the trend. When an up-trend is punctuated by a decline, volume often picks up in a flurry of profit taking. When a dip continues but volume shrinks, it shows that bulls are no longer running or selling pressure is spent. When volume dries up, it shows that the reaction is nearing an end and the up-trend is ready to resume. This identifies a good buying opportunity. Major downtrends are often punctuated by rallies which begin on heavy volume. Once weak bears have been flushed out, volume shrinks and gives a signal to sell short.
Exponential Moving Averages (See the FAQ section on EMA's for more information)
Exponential Moving Averages - A relatively short EMA is more sensitive to price changes - it allows you to catch new trends sooner. It also changes its direction more often and produces more whipsaws. A whipsaw is a rapid reversal of a trading signal. A relatively long EMA leads to fewer whipsaws but misses turning points by a wider margin. The longer the trend you are trying to catch, the longer the moving average you need.
Trading Rules - A successful trader does not forecast the future - he monitors the market and manages his trading position. Moving averages help to trade in the direction of the trend. The single most important message of a moving average is the direction of its slope. It shows the direction of the markets inertia. When an EMA rises, it is best to trade the market from the long side, and when it falls, it pays to trade from the short side.
When an EMA rises, trade that market from the long side. Buy when prices dip near or slightly below the moving average. Once you are long, place a protective stop below the latest minor low and move the stop to the break-even point as soon as prices close above their EMA.
When the EMA falls, trade that market from the short side. Sell short when prices rally toward or slightly above the EMA, and place a protective stop above the latest minor high. Lower that stop to the break-even point as soon as prices close below their EMA.
When the EMA goes flat and only wiggles a little, it identifies an aimless, trendless market. Do not trade using a trend following method.
13 Day Exponential Moving Average - Often used for determining a new trend line direction of a security, a plus (+) indicates that the trend is up and a negative (-) indicates that the trend is down. Ideally, one should trade only in the direction of the trend that one is using. (i.e. is you are using a long-term trend line you should only take a position when the 13 day EMA is a positive (+), conversely when the trend is down you should trade only when the 13 day EMA is negative (-).
26 Day Exponential Moving Average - I use the 26 day moving average in conjunction with the 13 day EMA and whenever the 13 day EMA crosses over the 26 day EMA I take that signal to trade in the position of the crossing. |
