GUEST COMMENTARY - ROBERT DEEL
INTRODUCTION... While John is finishing up his well-deserved vacation this week, we are bringing you market commentary from several different analysts. First up is Robert Deel, President of TradingSchool.com. Robert and John have known each other for years and Robert is recognized internationally as a expert trading instructor and author.
NASDAQ SUMMARY... Success in the stock market is, to a great extent, the ability to see an opportunity others do not. If you are patient, time usually delivers a set of circumstances that can create an opportunity. Those who have the foresight to act when that opportunity knocks are many times rewarded.
The following is a short-term analysis of the NADSAQ Market.
The NASDAQ market has been in a bullish trend since April and encountered its first overhead resistance at 1550. From this resistance point a pull back occurred and we are currently making a second assault on the 1550 resistance level. Bullish buying activity is not that unusual after Memorial Day. We will know in the next few days if the rally will continue.
There is a possibility of a double top occurring at or near this resistance level. Probability suggests that the NASDAQ is due for a short-term correction. If you measure the NASDAQ oversold rallys to the reversal points you will find that on average it will rally 213.74 points before a correction occurs. The maximum rally was 311.53 points. At 1550 (current resistance) the NASDAQ has moved 201.88 points. This would suggest a possible short-term reversal soon. Indicators also point to a possible overbought reversal. RSI, Bollinger Bands, Williams %R, and other indicators point to a high probability correction.
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TRADING STRATEGY... Another factor to consider is once a bullish oversold rally occurs it usually lasts for 15 to 21 trading days before it corrects.
Even though the probability is high for a pull back, as traders we should always trade what is. Never put on a trade until you have confirmation that the trend is in fact confirming your analysis. Great traders don't guess what the trend might be, they trade what is. Once you have this confirmation enter the position and place a protective stop. If the trend is down you must know how to short. In general stocks and markets fall 67 - 80 percent faster than they rise. This gives traders who know how to short a real advantage when a down trend exists.
STOCKS TO WATCH... Below is a list of stocks you should watch for bullish and bearish trend and trend reversals. This list of seven stocks should serve you well. NOTE: If you are going to trade you must learn how to short stock. You are handicapped if you can only trade on one direction.
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WRAPUP... Thanks again to Robert Deel. Be sure to check out his website, TradingSchool.com. John will be back next Monday.
