Author Archives: Trader

Shoppers Drug Mart – Bullish white candlestick

Bullish white candlestick for Shoppers Drug Mart

Daily Chart - (SC)

There was a bullish white candlestick for Shoppers Drug Mart (SC) on Friday, February 4.

It opened at $37.15 which was above the support level of $37.00.  The stock traded to a high of $39.13 and closed at $38.77 which was a gain of 4.18% for the day. The tall white candlestick is the graphical representation of that price action.

Please customize and then reference the full-size chart from Bigcharts.com for a better overall view of the trend.  Shoppers has been trading sideways since October so a break above the $40.00 resistance level would be a significant event.

Read the Globe and Mail article,  Shoppers Drug Mart’s quest for an elixir, for some current background information.

Note: You must take a couple of minutes to customize Bigcharts.com so that the links to the charts open with the indicators used in this site.

Note: This analysis is for educational purposes. 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

BigCharts – Advanced chart settings

Here is how to customize Bigcharts using the advanced chart settings

 

BigCharts - Advanced Chart Settings

You need to take a couple of minutes to input one-time settings to customize the chart view. Now, what you see on your computer is consistent with the explanations on this site.

This link for the 6-month TSX chart will open in a new window in the the advanced settings mode.

Follow these steps to customize the chart:

  1. Select SMA (3-Line ) in the drop-down list. This is the setting for three simple moving averages.
  2. Input 10,20,40 which is 10-day, 20-day, and 40-day simple moving averages.
  3. Select Volume in the drop-down list.
  4. Select OBV in the drop-down list. This is on balance volume which will be discussed in future posts.
  5. Select MACD in the drop-down list.  This is a momentum indicator. I do use other indicators in this option like RSI.
  6. Select Candlestick , Default and Big for the chart style.
  7. Select Store Chart Settings. This will set a cookie on your computer.

Now the settings are stored on your computer and will link properly from the posts.

I will discuss these advanced settings and others in future posts.

Another bullish white candlestick for the TSX

Technical Analysis: Bullish white candlestick for the TSX

TSX Daily Chart - Feb 3, 2011

TSX closes at 13,841 which was in a whisker of the high for the day of  13,844. When the close is at the high or near the high for the day, the candlestick is classed as having a shaven head.

The bullish white candlestick for today (Thursday) is a graphical presentation of what is logically bullish:

  1. The TSX index opened above both the previous day’s (small red insignificant candlestick)  close and the close for the bullish white shaven head candlestick on Tuesday.
  2. There was a small lower shadow which indicated that there was little sell-off after the open.
  3. It was a relatively tall candlestick which was just a graphical representation of the 161 point (+1.18%) move in the index.
  4. There was no upper shadow: in other words there was no profit taking at the top of the market.

The bulls were definitely in charge today and I now want to introduce the concept of confirming indicators. Please customize Bigcharts so that we are singing from the same page in the hymn book, and then look at the 6-month daily candlestick chart which will open in  a new window. On this chart you will notice the following:

  1. You will see the bullish white candlestick where I snipped the chart for this post.
  2. All three short-term simple moving averages are above each other and are moving up.
  3. The close today is above all the short-term moving averages.
  4. The trading volume was relatively high.  The trading volume is the fuel that lights the candlestick and should increase as the index rises.
  5. The on balance volume is trending up. It should move in the direction of the price trend: if not, we have divergence and this is not good.
  6. The MACD indicator, a short-term momentum indicator,  is moving up in the direction of the price trend.

Shaven head white candlestick for the TSX

Candlestick Charts: Shaven head candlestick or the TSX

TSX Daily Candlestick Chart - Feb 1, 2011

Technical analysis, using candlestick charts, allows you to gain a quick snapshot of the price action without bogging down in the details.

Today (Tuesday), the TSX opened above Monday’s close and high for that day. The high is indicated by the shadow on Monday’s candlestick.  So, we had a very nice opening to start Tuesday trading: the opening is the rudder for the trading day.

Then the market continued to trade higher and closed at 13,712 which was very close to the high of 13,714. Anytime a stock or index closes near the high of the day, that is a very good closing. It is called a shaven head white candlestick because there is no shadow.

Another important principle to discuss regarding technical analysis is the reversal of resistance to support.  Yes, when resistance is penetrated with a close above that level, that resistance level (13,500) reverses rolls and now becomes support.

Reference the full sized 6-month Bigchart for the TSX,

Bullish white candlestick closes at 13,551

TSX daily candlestick chart for Monday, January 31, 2011

TSX Daily Candlestick Chart

This was a break above resistance at 13,500.

Today’s chart snippet for the Toronto Stock Exchange S&P/TSX Composite Index shows the bullish white candlestick which closed at 13,551.  This was a close above the resistance level of 13,500.  View the  this full size customized chart which is provided by BigCharts.

Now, for the rally to continue, the tsx should open at or above the close of today and end higher tomorrow: in other words, another white candlestick. Bulls like tall white candlesticks with small shadows or none at all.

Talking about shadows, a candlestick with no lower shadow is said to have a shaven bottom. And you guessed it, a candlestick with no upper shadow is said to have a shaven head.  In a white candlestick, this is a very bullish pattern depending on the height. And in  a dark candlestick,  it is considered very negative.

All the market news is reflected in today’s candlestick: Egyptian protests, price of crude, copper at a all time high and the list goes on.  How the market indexes or individual equities react to both good and bad news is an important observation in technical analysis.  One guideline, if a stock does not sell-off on bad news then it is going up.

Shooting star candlestick cannot pierce 13,500

TSX weekly candlestick chart showing congestion areas

TSX weekly chart - Jan 28, 2011

The most important point of technical analysis is to determine the trend for an index or equity.

This post will summarize the price action for the TSX over the past week. You can trade online using the graphical representation of candlestick charts.

The snippet of the first chart to the right, taken from this 3-year weekly chart of the TSX, reveals that the major trend (over six months)  is up.  You can draw a trend line under the lows to define the trend, but in this case the 50-day moving average is a good trend line. The snippet also shows two congestion areas on the weekly candlestick chart for the TSX: prices never go straight up but advance  like the steps in a staircase.

Now, I will focus the analysis on the daily candlestick chart to determine the intermediate trend (three weeks to three months) and the near-term trend (less than two or three weeks) for the TSX.

TSX daily chart for January 28, 2011 showing a spinning top candlestick

TSX Daily Chart - Jan 28, 2011

The snippet of the second chart taken from this 6-month customized daily chart of the index focuses on the January congestion zone which is highlighted in the yellow box on the first chart.

Trend can go three ways: up, down and sideways.  And, any index or equity can spend a lot of time trading sideways in a lateral trading range. The near-term trend for the index is sideways with support at 13,200 and resistance at 13,500.

Let’s focus on the price action  for the TSX over the past week of January 24-28. You can review posts  for some notes on the  daily action.

Daily chart of the TSX showing shooting star candlestick

Daily Chart - TSX

On Tuesday, the shadow of the spinning top bounced off support at 13,200. On Wednesday, the bullish candlestick was very encouraging. On Thursday, there was no follow through on the bullish candlestick and the spinning top spelled indecision with a feeble attempt to break 13, 500: this was not encouraging. Then, on Friday, the shooting star flamed out on its attempt at 13, 500.

This congestion zone must be monitored carefully  as the rally that started in August looks a little extended.  A close below 13,200 would be taken very seriously by most traders.

TSX cannot break technical resistance at 13,500

TSX daily candlestick chart

TSX Daily Chart - Jan 27, 2011

Technical analysis can be adapted to any time frame. Today, we continue our analysis of the near-term trend (less than two or three weeks) for the TSX.

The index is still in a consolidation phase with resistance at 13,500 and support at 13,200.  If the index breaks 13,200 on the downside, the major support level is then 13,000.

What did today’s candlestick reveal?

It was a small red candlestick with no major negative implications when viewed on its own. When viewed in relation to the previous day’s tall white candlestick, it is classed as a harami cross ( inside day) formation.  In other words, the price movement was within the range of the previous day’s action. It just confirms the consolidation phase (sideways) for the TSX and was not a positive pattern after a tall white candlestick.

The index must break and hold above 13,500 to confirm a new upleg in the market.

The TSX looks a little tired at this stage . Be cautious about adding to long positions.

The chart snippet above was snipped from this 6-month live chart. This large chart will give you a better overall view of the trend and includes other customized indicators.

Is there any doubt about the trend for BCE?

The 100-day moving  defines the trend line for BCE

Yes, it is definitely up. Defining the tend is the most important concept in technical analysis. You must always trade in the direction of the trend and jump aboard for the ride. Use candlesticks and other confirming indicators — moving averages, on balance volume and momentum indicators — to determine when it is time to exit the trade.  All the indicators will be reviewed in future posts using real time examples.  And, the objective of the site is to  keep-it-simple: anyone can complicate a topic.

Technical Analysis: BCE 3-year weekly candlestick chart with the moving averages, volume and momentum indicators.

BCE 3-Year Weekly Chart

See the article in the National Post on the analyst upgrade for BCE.

Note: This analysis is for educational purposes. 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