February 2006, Volume 3 Issue 2 Know It - Profit!
"Steel Producers Show Strength... Firm Gains Fortify Industry"
Steel Producers have put in a solid base since June 2005... recently, outperforming the S&P 500. Is this industry ready to prove its mettle?
Also... discover an exclusive method for timing stock trades. I'll show you the pieces to the puzzle.
But first, see which index is poised to make double-digit gains in the first quarter of 2006...
The Russell 2000 (^RUT) is up an impressive 7 percent relative to the other broad market indices.
The Nasdaq Composite (^IXIC) is trailing the Russell 2000 by 5 percentage points... up just 2 percent year-to-date.
The Dow Jones Industrials (^DJI) and the Standard & Poor's 500 (^GSPC) indices are lagging behind, with one-half and one percent relative gains, respectively.
Will the Dow Industrials lead the other indices lower? Find out in Market Metrics...
Click Here For Broad Market Analysis
The PHLX SIG Steel Producers Index (^STQ) is red-hot... up 24 percent since last month!
Also, making stellar gains this month are the PHLX Semiconductor Capital Equipment Index (^SEZ) and the PHLX Oil Service Sector (^OSX)... both marking a 15 percent increase.
And... the AMEX Gold Bugs Index (^HUI) is up 15 percent for the month, as well.
For more leaders and laggards, go to Market Metrics...
Click Here For More Stock Sectors
AK Steel Holding Corp. (AKS) has broken out to a fresh 10-month high on rumors of a possible take-over by German steel giant ThyssenKrupp...
View Current Chart of AKS
In this daily chart of AKS
, I combined four technical indicators to help identify a possible area
to enter a trade.
First, on 1/26/2006 a moving average channel buy signal was generated when the second consecutive candlestick closed completely outside the channel.
Next, I identified turning points based on Tom DeMark's Sequential. You'll notice it doesn't always pick the exact top or bottom. So, I use the signals as more of a yield sign... a point where I can begin looking for a candlestick reversal day.
The oscillator at the bottom of the chart is derived from a short and long-term Commodity Channel Index (CCI) crossover. It's based on a trading system developed by Ken Wood.
Don't let the name fool you. The CCI can be used on stocks, or any other tradable instrument. I'll reveal more about how I use the CCI in future newsletters. Stay tuned!
Finally, as a confirming tool, I applied the Point and Line (P&L) charting technique... identifying the recent top on 1/30/2006.
Created by Charles Drummond, P&L charting is a unique way of looking at market behavior. His geometric method has an uncanny way of nailing tops and bottoms. Sometimes, to the tick!
So, if we are going to take a position with AKS, we should wait for a pull-back to the area of support... in the $9.75 to $10.50 price range.
Where Are They, Now?...
In the November 2005 issue of Chart Wealth, I said Newmont Mining Corp. (NEM) would reach a price target between $52 to $55.
Where is NEM trading, today? Charts In Action has the answer...
Click Here For Charts In Action
I hope this month's Featured Chart further expands your thinking about technical analysis and its unlimited possibilities.
Although trend lines, Fibonacci extensions and Elliott Wave counts will serve you well, sometimes a new perspective will help you identify additional trading opportunities.
Until next time...
Russ Schmidt, President
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Stock-Charts-Made-Easy.com is not an investment advisory service, a registered investment advisor or broker-dealer and does not imply or suggest which securities you should buy or sell. You should always check with a licensed financial advisor and/or tax advisor to determine the suitability of any investment.
It should not be assumed the technical indicators, analysis techniques or trading methods presented in this newsletter will be profitable or that trading decisions based on their use will not result in losses. Past results are not necessarily indicative of future results. Examples presented in this newsletter are for educational purposes only. Any trade set-up illustrated is not a solicitation to buy or sell a security. The author, publisher and any affiliate linked to this newsletter assume no responsibility for your trading results. Remember... there is a high degree of risk in trading.
The Commodity Futures Trading Commission requires the following statement:
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
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