The Importance of Technical Analysis When Using Relative Strength
Posted on March 27, 2012
It has been a while since our last update as we have been working on the Day Trading Strategy Videos which you have hopefully checked out.
In this market update we analyze the Relative Strength while showing you why it is important to keep it.
In the last two updates we said that the Nasdaq was the strongest stock index and it would be wise to trade that instead of the S&P-500 for example. Nasdaq continues to outperform which means you would have had a better return on your capital.
All 3 major indices have broken the 2011 high and are looking strong. Market is extended and short term overbought. We recommend tighten your stops as market can sell off going forward. This does not mean we recommend entering any shorts as both short term and long term trend is up but we are simply saying that market has rallied a bit and a breather might come soon.
Technical Analysis Of Silver Prevented A Loss
Gold has broken a down trend line and retested it. This could set up for a potential move but until we see an improvement in the relative strength there is no reason to trade it as our trading capital is better off staying in the better performing market: Nasdaq.
Silver hit our resistance lines that we drew in our previous update. Hopefully this prevented you from going long right below resistance and thereby save you from losing your hard earned money. This shows the importance of doing your home work and analyzing the markets. Draw in the support / resistance lines even if they only prevent one loss as it will be worth it.
