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Chart of the Week: GE
Apr 30, 2008 - For those bulls eager to get a quick fast gap fill back to the top, this area needs to be watched carefully...
GE is one of the major players of the DOW index that never seemed to be affected by any crisis. Its long history as a stable company never seemed to be in danger of extinction like many other former DOW components. It was always managed to play safe through its high-regarded upper management. But not everyone is immune to news. Even sour earnings can batter its stock. Taking a look at the weekly chart, it doesn’t say much except that the volatility has increase dramatically, with bars wider in range than normal ($2 range vs. $5 in April). Moving on to the daily chart (below), the gap made back at the end of the March is already recovering slowly. While gaps are great for day traders, there are opportunities for swing traders as well, as this stock will illustrate. But finding a bias that may coincide with the weekly chart might be difficult. There seems to be bullish sentiment in the weekly but the daily tells otherwise. Now the gap is a tricky play, it often is a very intense area with high volume (as can be seen on the day of the gap, so lots of participants are involved from the top and bottom of the gap). Most day traders will play the gap fill. While it’s true that most of the gaps do fill, it has to happen quickly, or the participants that believe in gap fills will quickly abandon their positions. From this daily chart, the gap is filling quite nicely. Unfortunately there is a resistance right in the middle of the gap ($33.19). This is an area the bulls need to overcome if they want price to make it to the top of the gap ($36.41). If they don’t then there may be some push back down to the bottom of the gap. For those bulls eager to get a quick fast gap fill back to the top, this area needs to be watched carefully. In addition, while most of the indexes are near their resistance areas, this could be a time for a break from the move to higher prices. This week should decide if price can take out this resistance area. The more volume there is into the push, the higher the chance of achieving it. If price makes a move back to the bottom and bounces off it, then this time the bulls have every reason to move to fill the gap as more bulls join the fray. But most importantly, watch the volume to find the sincerity of the price move. Discuss this article in the forum. ...thanks
for the trust you've shown in me and my business.
P.S.- One more thing... how would you
like to practice trading on the Forex currency market with
Disclaimer: Please note that charts and commentary provided by the moderator are for educational purposes only. Any trades placed upon reliance on the moderator’s charts or information is taken at your own risk for your own account. Past performance is no guarantee of future results. While there is great potential for reward trading stocks, futures and options, there is also substantial risk of loss and you must decide your own suitability to trade. Future trading results can never be guaranteed. This is not an offer to buy or sell stock, futures, options or commodity interests. Most trading systems are based on historical formulas which have worked in the past. However, what has happened before may or may not happen again. You can lose all your money trading stocks, futures, and options and you must decide your own suitability as to whether or not to trade. Only trade with true risk capital you can afford to lose. Only trade markets you can properly afford to trade. Properly funded trading accounts typically perform better than those that are not. Never risk more than 2-3% of your account on any one trade. Always define your risk before entering a trade and place a stop to limit your risk. There are no guarantees or certainties in trading. Trading involves hard work, risk, discipline and the ability to follow rules and trade through any tough periods during a system’s draw downs. If you are looking for a guarantee, trading is probably not for you. Most people lose money trading. One of the reasons is that they lack discipline and are unable to be consistent. A system can help you become consistent. Ironically, worrying about the monetary aspect of trading can contribute to and cause a trader to make trading errors. Therefore, it is important to only trade with true risk capital.
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