Technical Analysis

Class-2

Chart Basics, Volume, Support and Resistance, Trendlines, Moving Averages(SPY Daily Chart July 2007-PresntStage 3 Top and Stage 4 Decline)Yellow=50 Day Moving AverageBlue= 200 Day Moving Average

Trendlines and Pivots

Candlesticks

Price Representation

Candlesticks: Hammer“Hammering out a bottom”

Candlesticks: Shooting Star“There’s Trouble Ahead”

Candlesticks: Stars, Dojis, Hanging Man and Engulfing Candles

Simple and Exponential Moving AveragesYellow= 50 Day Simple Moving Average Blue= 200 Day Simple Moving Average

Yellow Dot= 50 Day Exponential Moving AverageBlue Dot= 200 Day Exponential Moving Average

The Four Stages of a Market:1 Base/Accumulation2 Mark-up/Advance3 Top/Distribution

4 Decline(HOV 9-Day Chart 2000-2008)

Yellow=approx 50-day M.A.Blue=approx 200-Day M.A.

Stage 1: BaseBreakoutPullback

Volume Advance(HOV 3-Day Chart 1999-2001)

Stage: 2 AdvanceFractal-Staging

(HOV 3-Day Chart 2000-2005)

Stage 3-TopYellow= 50-day moving averageBlue= 200-day moving average

Fractal Staging(HOV Daily Chart 2004-2008)

Stage 4 Decline(HOV Daily Chart 2007-Present)

Yellow=50-Day Moving AverageBlue= 200-Day Moving Average

Moving Averages: Simple vs. ExponentialYellow= 50-Day Simple moving averageBlue= 200-Day Simple moving average

Yellow= 50-Day Exponentialmoving average

Blue= 200-Day Exponential moving average

Moving Averages: 5 and 10 Day Simple Moving AveragesThe direction of a 5-sma on a daily chart often signals the character of the

short-term trend. A breakout above a 10-sma/ema often signals the start of a short-term move.

(SMH Daily Chart, Sept 2007-Feb 2008)

Macro/Micro: 5 and 10 sma on a Weekly ChartA: 5 sma rising and x-over the 10 sma +7.64%

B: Lateral Trend +.54%C: Rising 5 sma and X-over the 10 sma 3.45%-8.83%

D: Lateral Trend =+1.03%E: Declining 5 sma and X-under the 10 sma= -15.13%/-21.67%

Gaps: Breakaway, Continuation (measuring/run away), and Exhaustion(IMO Daily Chart Oct 2007-Present)

Gaps: Filling the Gap, Volume Confirmation, Support and Resistance(VLO Daily Chart, March 2007-Feb 2008)

Exhaustion Gaps

Breakaway Gap

Wilder’s RSI: Divergence AnalysisA) Negative Divergence between 1 & 2B) Positive Divergence between 3 & 4C) Positive Divergence between 4 & 5D) Positive Divergence between 6 & 7

(SKF 10-min Chart 1/24/2008 - 2/4/2008)

Wilder’s RSIA) Positive Divergence between 1 & 2

B) Negative (Relative) Divergence between 3 & 4C) Negative Divergence between 4 & 5C) Negative Divergence between 5 & 6

B/C) Negative (Relative) Divergence between 7 & 8