TradingMarkets Chart of the Day
Every day TradingMarkets publishes a number of different lists
on the
Indicator page. For today’s chart of the day, let’s look at the
Stocks Ready To Drop scan to see if we can find any good picks. These
are the stocks that today made new 10-day highs that are still in an downtrend
as they are trading below their 200-day moving average. Historically,
these stocks on average have had larger than normal short-term downside
reversals.
NVIDIA
(
NVDA |
Quote |
Chart |
News |
PowerRating) has been trading below its 200-day
moving average
since the beginning of June. Stock price made two major attempts to break
resistance at the MA, but both attempts failed. Since failing to break
resistance, price has not been able to come close to reaching the 200-day MA
resistance. On 7/25 price made new 10-day highs; for a stock trading below
its 200-day MA, such a move requires a lot of effort. Traders should view
this move up as a pullback, as this down-trending stock will probably continue
in its original direction. Look for
(
NVDA |
Quote |
Chart |
News |
PowerRating) to lose a couple of points
over the next few days, as price corrects itself from these new highs.
Always Remember: Look for pullback
opportunities in trending stocks by identifying the trend with the moving
averages. Wait for price to move against the trend, giving you a better
buy-in price before the stock resumes its trend.
John Patrick Lee