Ja’nus: Early Roman god of gates and portals, represented by two opposing faces, probably suggesting the two sides of a door. Janus symbolizes the two-sided nature of things. During bull markets, traders alternate between...
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Module 5 – Strength-Following and Contrarian Markets
Introduction ‘I wish I was the fish, he thought, with everything he has against only my will and my intelligence.’ – The Old Man and the Sea My training as a trader began more than thirty years ago. I was lucky...
Markup
Price does indeed break support (see arrow), and we are stopped out of half of our long position. After a brief rally, WMT slips back to long-term support between 11 and 12. This is a price level which has been well-tested over...
The Trap Closes
We have traded WMT in the past both long and short. But the upside potential for the stock is now so great that we resolve to hold our shares strongly and to increase our position as new evidence adds to the bullish case. From P...
Terminal Shakeout
A corrective rally to N recovers nearly one-half of the decline from K to M. The rally peters out on low volume before price falls back to test support at 11. Volume picks up on this test, and we conclude that buyers are again...
Trading the Short Side: Shorting Stocks
We are of the opinion that WMT has been accumulating since at least early 1994. A big upside move may be in the making, and we are tuned to the long side. Nevertheless, tipped off by WMT’s recent relative weakness, we...
Sign of Strength?
A one-half point chart of WMT provides two preliminary upside targets. The first count of 2 1/2 points (1/2 x 5=2 1/2) across the 11 row offers a target of 13 . This count makes sense to us since it returns WMT to the high point...
Reaccumulation
Indifferent relative strength kept us out of WMT during 1992, even though the stock’s nominal price moved up over that period. As 1993 gets underway there is little evidence of organized distribution, apart from increased...
Relative Strength Divergence
The next chart shows the normalized performance of Wal Mart (WMT) and the benchmark against which WMT is measured in this study, the Standard & Poors’ 500 index. Even without the aid of a relative strength calculation...
Module 4 – Relative Strength
Computing Relative Strength Here’s a mental experiment in relativity: Imagine that you are standing on the bank of a river watching a motorboat race. How would you determine the speed generated by the boats themselves...