Stocks breakout from properly formed bases everyday but many investors don't understand how to locate a pivot point or what patterns to study that may contain this very important buy signal. A pivot point can be described as the optimal buy point or the area at the end of a familiar base pattern where the stock breaks out into new high territory. William O'Neil, the founder of Investor's Business Daily is considered the pioneer of the pivot point in modern times. As Jesse Livermore explains in his book (1941), the pivot point can also be described as the point of least resistance....

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Both the stock market and oil prices rallied recently, which seems to be a paradox, because high oil prices are negative for earnings (i. e. a higher production cost and a higher consumer tax). However, the stock market was worried about another "soft patch," of slower economic growth, and the sharp rise in oil prices suggest the U. S. economy is still expanding at above trend growth. The two charts below are same period daily charts of SPX and OIH. The short-term technical indicators suggest SPX is near a top, e....

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On Friday or Saturday evening my wife gets a movie from Block Buster and after dinner we sit, hold hands and watch. This week she brought back one that I think every investor or anyone contemplating investing in the market should see. It is called "Boiler Room". How many times have you been called out of the blue by some no-name broker who wants to make you rich provided you buy shares in this great new issue or some stock that is just about to "take off". Usually they start off with do I remember he called me 6 months ago and recommended so-and-so issue that is currently in the news because it has gone up 100 or 200%....

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With all the bad news that has been dumped upon the economy for some reason the stock market is going up. Why? The SEC (Securities and Exchange Commission) has just set up new guidelines for core earnings. No more proforma computations. You know what proforma means - the company CEO or Treasurer waves his magic wand and says this is what I expect to appear as soon as I let the genii out of the bottle. And pigs can fly. These imaginary numbers may give his company a Price/Earnings ration of 20 which is pretty good by today's standards....

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One Saturday morning, while he was sitting at his computer studying the market, David's 7 year old daughter came up, tugged at his shirt sleeve, and said, "Daddy, why aren't we rich?" He looked his child in the eye, and thought to himself, what a great question - Why aren't we rich? As she stood there expectantly waiting for an answer, he struggled to come to terms with the realization that, although he had focused his complete attention on trying to create wealth for more than 10 years, he had never actually made any real headway....

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That's why the most important aspect of momentum trading is the knowledge FILTER you employ to make your buy and sell decisions. There are many "fantastic" stock systems and trading strategies outhere, but you need to test them in order to discover which ones help you the most. That's part of your homework as a stocktrader. Test, test and test again. Complicated online trading strategies that rely on a "boat load" of technical analysis indicators can make you slow, and being slow when trading hot momentum stocks can be as dangerous as not knowing what to do in the first place....

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Your broker never wants you to be in cash. You might take it out or invest it in something else. "Don't worry, the market always comes back." Yes, and pigs can fly. Fund managers are even worse. Because I recommend selling out temporarily and going to cash does not mean I don't have a long-term program. It means I don't want to participate in a down market. CASH IS A POSITION. It is the same as owning Vanguard Index 500 when the market is going up and being in a Money Market Fund earning interest while the market is going down, but not losing your principle....

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Recently I watched my favorite football team lose a vital game. I simply love this team. I became so emotional about it; I thought "?this isn't good for my health". Can you believe that, but that's how we get when we are passionate. I simply couldn't believe (I didn't want to believe) they could lose. However, as a committed fan, I was going all the way with them. If they were going down, I was going down with them. After all, you don't give up on your team simply because they don't win every game....

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Every broker and financial planner will tell you that you cannot time the stock market. I saw John Bogle, the great seer of Vanguard, on CNBC saying it can't be done. Of course, it is easy to understand why he and every other mutual fund manager would say that as they would have a problem managing huge inflows and outflows of money and he was buying and holding during the 18-year bull from 1982 to 2000. Every successful hedge fund managers knows that Buy and Hold is death for capital investment....

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I receive emails from Morningstar. This company provides statistics and analysis of just about every publicly traded stock company you can think of as well as voluminous information on mutual funds around the world. You can ask them about a company's sales, management, marketing plan, their performance within a corporate sector, ratios of all kinds, etc, etc. The have it. After you have gleaned all these facts and analyzed them there is still one unanswered question. If I buy this equity will it go up?...

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Ever notice how behavior in one area of life can apply to behavior in other areas of life? For example, I've noticed a number of things while driving that apply to online trading. One of them is regarding how people behave toward traffic signals. In the USA, where I live, all the traffic lights are red, yellow, green - red for stop, yellow for slow down or caution and green for go. The lights always change in order from red to yellow to greenand back again to red after a time. How drivers relate to the changing lights is NOT always the same....

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