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Is the market about to bounce or correct again? Both Europe and Asia are taking a pessimistic view on
U.S. stocks, but the news isn't much better for them these days.
Already faced with the unemployment rate rising, retailers are bracing for some more ugly sales numbers
and the commercial real estate crisis shadow is growing and threatening to hit hard as it errupts into it's
own ugly mess. Coming on the heels of the housing crisis, many think that could become the catalyst to a
"double bottom" correction pattern which "must occur for us to finally start to recover fully."
Technical analysis gurus might argue that all of that stuff is noise, but they should have cause for concern
as they look at the S&P500 chart today. During yesterday's session, a key support level was pierced and
things aren't looking good. Anxiety over the start of the earnings season has even dampened optimism.
Is that a newly formed "head and shoulders" pattern?
Will the market rally again or is it due for another correction?
The head and shoulders pattern is generally regarded as a strong reversal pattern and it is most often
seen in uptrends.
It is also most reliable when found in an uptrend as well. Eventually, the market begins to slow down and
the forces of supply and demand are generally considered in balance. Sellers come in at the highs (left
shoulder) and the downside is probed (beginning neckline.) Buyers soon return to the market and
ultimately push through to new highs (head.) However, the new highs are quickly turned back and the
downside is tested again (continuing neckline.) Tentative buying re-emerges and the market rallies once
more, but fails to take out the previous high. (This last top is considered the right shoulder.) Buying dries
up and the market tests the downside yet again. Your trendline for this pattern should be drawn from the
beginning neckline to the continuing neckline. (Volume has a greater importance in the head and
shoulders pattern in comparison to other patterns. Volume generally follows the price higher on the left
shoulder. However, the head is formed on diminished volume indicating the buyers aren't as aggressive as
they once were. And on the last rallying attempt-the left shoulder-volume is even lighter than on the head,
signaling that the buyers may have exhausted themselves.)
New selling comes in and previous buyers get out. The pattern is complete when the market breaks the
neckline. We will have confirmation of that broken neckline soon and keep our fingers crossed.
If there is a downward move coming, then the extent of the breakout move can be estimated by measuring
from the top of the middle peak down to the neckline. This targetcan usually be projected downwards from
the point of breakout.
Keep your eyes on the trading action short term.
The good news is that this site was launched after some of us realized that the biomedical sector showed
great resolve as the rest of the market was falling apart.
The founders of this site looked at their own portfolios last year and realized that most of their biggest
trades developed successfully thanks to being informed about biotech. That means having good, reliable
information about not only good up-and-coming companies, but also arming yourself with knowledge of
important catalyst events- like upcoming FDA decisions and approvals- which undoubtedly have an impact
on the price of shares.
Where some sectors have been flat, biotech has had volatility. Market analysis and knowledge about the
science of this sector is key to decoding the signs this sector gives us. Our job is to continue to provide
you all of those things because all of those tools can provide you with critical "smarts" that will help you
make money - even in down markets.
A very sound, analytical approach to successful biotech investing is within reach, but one must actively
conduct research and have access to the right tools.
Stay tuned.
Things may be about to get even more interesting, but if you're going to trade biotech stocks give yourself
a pat on the back. You're in the right place!
Original Article
U.S. stocks, but the news isn't much better for them these days.
Already faced with the unemployment rate rising, retailers are bracing for some more ugly sales numbers
and the commercial real estate crisis shadow is growing and threatening to hit hard as it errupts into it's
own ugly mess. Coming on the heels of the housing crisis, many think that could become the catalyst to a
"double bottom" correction pattern which "must occur for us to finally start to recover fully."
Technical analysis gurus might argue that all of that stuff is noise, but they should have cause for concern
as they look at the S&P500 chart today. During yesterday's session, a key support level was pierced and
things aren't looking good. Anxiety over the start of the earnings season has even dampened optimism.
Is that a newly formed "head and shoulders" pattern?
Will the market rally again or is it due for another correction?
The head and shoulders pattern is generally regarded as a strong reversal pattern and it is most often
seen in uptrends.
It is also most reliable when found in an uptrend as well. Eventually, the market begins to slow down and
the forces of supply and demand are generally considered in balance. Sellers come in at the highs (left
shoulder) and the downside is probed (beginning neckline.) Buyers soon return to the market and
ultimately push through to new highs (head.) However, the new highs are quickly turned back and the
downside is tested again (continuing neckline.) Tentative buying re-emerges and the market rallies once
more, but fails to take out the previous high. (This last top is considered the right shoulder.) Buying dries
up and the market tests the downside yet again. Your trendline for this pattern should be drawn from the
beginning neckline to the continuing neckline. (Volume has a greater importance in the head and
shoulders pattern in comparison to other patterns. Volume generally follows the price higher on the left
shoulder. However, the head is formed on diminished volume indicating the buyers aren't as aggressive as
they once were. And on the last rallying attempt-the left shoulder-volume is even lighter than on the head,
signaling that the buyers may have exhausted themselves.)
New selling comes in and previous buyers get out. The pattern is complete when the market breaks the
neckline. We will have confirmation of that broken neckline soon and keep our fingers crossed.
If there is a downward move coming, then the extent of the breakout move can be estimated by measuring
from the top of the middle peak down to the neckline. This targetcan usually be projected downwards from
the point of breakout.
Keep your eyes on the trading action short term.
The good news is that this site was launched after some of us realized that the biomedical sector showed
great resolve as the rest of the market was falling apart.
The founders of this site looked at their own portfolios last year and realized that most of their biggest
trades developed successfully thanks to being informed about biotech. That means having good, reliable
information about not only good up-and-coming companies, but also arming yourself with knowledge of
important catalyst events- like upcoming FDA decisions and approvals- which undoubtedly have an impact
on the price of shares.
Where some sectors have been flat, biotech has had volatility. Market analysis and knowledge about the
science of this sector is key to decoding the signs this sector gives us. Our job is to continue to provide
you all of those things because all of those tools can provide you with critical "smarts" that will help you
make money - even in down markets.
A very sound, analytical approach to successful biotech investing is within reach, but one must actively
conduct research and have access to the right tools.
Stay tuned.
Things may be about to get even more interesting, but if you're going to trade biotech stocks give yourself
a pat on the back. You're in the right place!
Original Article
| Uh Oh...This Market Looks Familiar by BioMedReports.com, July 8, 2009 |
The market has shown some resiliency in the face of all kinds of bad news during
the last few months, but there is growing nervousness about the economy's
prospects as both companies and consumers alike continue to suffer from the
recession.
the last few months, but there is growing nervousness about the economy's
prospects as both companies and consumers alike continue to suffer from the
recession.
| BioMedReports.com is an informational website that focuses on healthcare and biomedical stocks. BioMedReport's Bio Visit the website at BioMedReports,com. |
|
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