Monthly Archives: February 2011

The trend is up for the S&P/TSX

The long-term trend, intermediate trend and the short-term trend are all up for the S&P/TSX as of Friday, February 18.

All the technical indicators look good. But, the market had a good run and I think it is overextended.  What will be the excuse to book profits? Investors are looking for a reason.

A 6 month candlestick chart for the S&P/TSX showing that the long-term, intermediate, and short-term trends are all up.

S&P/TSX 6-Month Daily Chart

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Note: This technical analysis is for educational purposes so you can learn to trade online using candlestick charts. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years.

Copyright © TradeOnline.ca All rights reserved

Near-Term trend for BMO is up

This 6-month daily candlestick chart for BMO reveals that the near-term trend is up and the intermediate trend is sideways.
Bank of Montreal (BMO) 6 month candlestick chart reveals that the near-term trend is up and the stock will meet heavy resistance at $62

BMO - 6-Month Daily Chart

The most important concept in technical analysis is the trend: you always trade in the direction of the trend.  The near-term trend for BMO, last three weeks,  is up  and is defined by the 10 day simple moving average (SMA) which is above both the 20 day and 40 day averages. The intermediate trend, last six months, is sideways with support at $58 and resistance at $62.

This brings up the another important concept in technical analysis — support and resistance.  Take a look at the chart.  BMO could not break $62 on three attempts over the last six months.  Both the bulls and the bears have memories of this price point. BMO will meet technical resistance at $62 in this rally.

The three confirming indicators:

  1. Volume is relatively light which is a negative indicator.
  2. On Balance Volume (OBV) is trending up with the move which is good.
  3. Relative Strength Index (RSI) is trending up which is good.

The shaven head ( stock closed at the high for the day)  white candlestick for Thursday was positive for the bulls.

Bank of Montreal was last featured on  tradeonline.ca on January 7, 2011

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Note: This analysis is for educational purposes so you can learn to trade online using candlestick charts. Please conduct your own analysis or consult your financial advisor before making investment decisions.
The chart snippets are from BigCharts.com which I recommend and have used for fifteen years.

Copyright © TradeOnline.ca All rights reserved

Bearish Engulfing Pattern for Shoppers Drug Mart

Shoppers Drug Mart could not break $41.

Your online trading success does not depend on your predictions for the market: your success depends on your online trades in reaction to market signals.

Bearish Engulfing Pattern for Shoppers Drug Mart on the 3 month daily candlestick chart

 

Updated article on Shoppers published in the National Post on March 30, 2011: Expanded Shoppers Drug services could help earnings, analyst says.

Please reference three previous posts on Shoppers Drug Mart.

  1. Shooting star candlestick for Shoppers Drug Mart
  2. Shoppers Drug Mart (SC) breaks resistance at $40
  3. Shoppers Drug Mart –  Bullish white candlestick

Shooting Star Candlestick for Shoppers Drug Mart

A shooting star candlestick developed on the daily candlestick chart which can be compared to a caution light.

It shows that the rally could not be maintained.  The stock opened at $40.82, above the close for the previous day’s bullish white candlestick, which was a strong opening.  But the bulls could not maintain the push  as the stock rallied to a high of $41.59 where there was selling pressure and the stock closed at $40.87: this was not a good day for the bulls.

Candlestick Analysis - shooting star candlestick for Shoppers Drug Mart

3-Month Daily Candlestick Chart

The trend is the most important concept in technical analysis. The intermediate trend (3 weeks to 3 months) is sideways and the near-term trend (within the last 3 weeks) is up. What we are trying to establish in this analysis is the likelihood of the near-term trend continuing upwards. Today, there is a hint of caution which you can see pictorially in the shooting star candlestick pattern.

Another important concept in technical analysis is support and resistance. On Monday, Shoppers Drug Mart closed above resistance at $40. This has been resistance for the last four months. The $40 price point reverses rolls and is now support for this stock. A close below $40 would be very negative for the near-term trend for Shoppers.

Shoppers Drug Mart (SC) breaks resistance at $40

Shoppers Drug Mart breaks technical resistance at $40 on this candlestick chart.

TradeOnline.ca featured Shoppers on February 6 and highlighted the first bullish white candlestick  that developed on above average volume. Above average volume is a confirming indicator and is the fuel that drives the upward trend. The $40 level is now support and the stock must hold above this point for the trend to continue.

Technical Analysis: Shoppers Drug Mart - candlestick chart - a bullish white candlestick breaks resistance at $40 on Monday, February 14, 2011

Shoppers Drug Mart (SC) 6-Month Daily

Shoppers Drug Mart will meet heavy resistance at $42. You can identify this point on the 3-year weekly chart.

Shoppers was upgraded from hold to buy on February 11 and the price target was raised to $43 from $39.

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Note: This technical analysis is for educational purposes so you can learn to trade online using candlestick charts. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years.

Copyright © TradeOnline.ca All rights reserved

85.2% gain in the TSX since March, 2009

Technical analysis gives you a snapshot of the S&P/TSX composite.

It has been a good run, and now is the time to closely monitor the candlestick charts and confirming indicators for a top reversal pattern.

Technical Analysis - 2 year weekly annotated candlestick chart for the TSX showing trend lines, piercing patterns, tweezers bottom, bullish engulfing pattern and the mighty hammer.

2-Year Weekly Candlestick Chart for the TSX

This is an excellent article from the National Post covering the fundamental valuation metrics for different markets: Did I miss the rally?

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Note: This analysis is for educational purposes so you can learn to trade online using candlestick charts. Please conduct your own analysis or consult your financial advisor before making investment decisions.

The chart snippets are from BigCharts.com which I recommend and have used for fifteen years.

Copyright © TradeOnline.ca All rights reserved