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Chart of the Week: Yahoo
Mar 24, 2008 - this stock technically has a good chance of filling the gap...
Now that the market has swallowed all the news from the Bear Stearns debacle, what’s next? The volatility has been so high for the past few weeks that most have forgotten that there are other players in the market that are just as important. With the eventual JPMorgan Chase’s take-over of Bear Stearns, it seems the deal between Yahoo and Microsoft has been pushed in the back burner. But it is the right place for the swing trader to ignore the stocks that are affected by the news and on to others that are technically more attractive in taking a position.
Looking at Figure 1, since Microsoft’s bid for Yahoo, the prices have been lingering near the top of the gap while investors are waiting for an ending to this story. At the moment, most investors are betting that MSFT will come out with another bid. On the technical scene, this seems unlikely; prices are below its high and below the gap, giving it a good chance of being pushed down or kept down by bigger and smarter money? From the technical standpoint, the chart indicates a confirmation of a price breakdown. There is one caveat: this stock technically has a good chance of filling the gap (most gaps do fill, especially it’s inflated for no reason). If there is a chance MSFT comes with another bid, all bets are off. But if the general market continues to erode, then chances are the gap will be filled with prices following the market down. This has a higher percentage of succeeding than the other way. Discuss this article in the forum. ...thanks
for the trust you've shown in me and my business.
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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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