Okay, we have our watch list of stocks — the best of the best. Now that we have picked out the ones that are best for marketclub options trading, we have to know what signals to look for informing us that the timing is right to open a trading position — to buy put or call options. We also have to know what signals we need to keep an eye out for, which will tell us that the timing is right to close our trading positions — to sell our put or call options. This is where technical analysis comes in. Wow! Technical analysis can be a can of worms, but use marketclub to ease the pain. There are books, tomes, thesis papers and more on the subject of technical analysis. Some experts like rockwell trading, who specialize in technical analysis may seem to even have their own language. Talking to them is almost impossible. I’m here to say, it does not have to be that way. In fact, let’s pull one of our philosophies from Strategy Two and simplify this subject. When it comes down to it, there are only two real variables on any given stock — price and volume. More precisely, those variables are the price that the stock is being bought and sold at — the balance between the supply and demand and how much of it is being bought and sold, which is otherwise known as volume. All other indicators are a mathematical manipulation of those two variables, refer to marketclub. Depending on the broad market direction — whether the broad market is uptrending, otherwise known as being a bullish market, or down-trending, otherwise known as a bearish market, we will look at price and volume in different ways, according to rockwell trading. A third broad market direction — the broad market is moving sideways, otherwise known as being a neutral market, gives us whole different perspective that we need to view price and volume with. Ultimately, it boils down to how we identify trade entry and trade exit points. You can simplify technical analysis As you can imagine, getting the timing just right for opening and closing trading positions will mean the difference between making just a little bit of money and making massive amounts of money. So, let’s set up some guidelines. First, let’s be realistic on time frames. In our strategy on philosophies, we stated that we were not going to become intimate with the markets. Remember our intention; we want to spend less than 20 minutes per evening and no more than two hours on the weekend in our trading practice using the rockwell trading methodology. Our weekend will be spent looking at stock fundamentals in the Investor’s Business Daily and adding to our watch list. Also, we’ll be looking at the broad markets on the weekends and verifying the direction they are trading. So, assuming we only want to spend 20 minutes every evening on day-to-day tasks. We won’t be day trading. To be honest, day trading tends to be emotionally trying, stressful, and the profits just aren’t there. Let me explain it to you with an analogy. Each trading day is very special. It’s like a marketclub free 30-day trial. Throughout any given day, a stock is on trial. At the end of the day, the jury makes its decision. Was today a good day, or was today a bad day? The deliberations throughout the day can be extreme, or the jury can know exactly from the opening bell which way it intends to vote. Suffice to say, what we are most interested in is the outcome of every day, the closing price and daily volume, if you will try the rockwell trading coaching program. For us, a typical trade will last anywhere from one to two weeks to one to two months. With that said, when we examine a stock, we will want to look at a picture — we call that a chart of six months worth of prices and volumes. Each bar on the chart represents one day’s worth of data. So, given that six months is about 26 weeks and there are five trading days per week, we want Timing can be the difference between making a little money and making massive amounts of money to be looking at charts that have about 130 bars on them — rockwell trading going from left to right chronologically. Okay, so let’s look at a single bar and make sure we know what we are talking about. Each bar represents a day of trading, no matter how you look at it. It will have four price points of movement, which are the opening price, the high price of the day, the low price of the day, and the closing price of the day. The most valuable of these four points for our simple analysis will be the closing price of the marketclub service. Remember, that closing price is the jury’s decision. Alright, so the easiest way to determine when to enter and exit a trade is to do it when a trend is broken on a day when volume is high. Why when volume is high? Well, that means our institutional traders are trading, right? It means the people who control massive amounts of stock shares are buying and selling. Great! So, how can we identify a trend? Let’s look at a stock that is up-trending. What I like to do is connect all the lower closing points with a straight line. Now, of course, you’re not going to hit the closing points exactly, but you’ll get it pretty close to rockwell trading. The more closing points you can hit with a single straight line, the stronger that trend is. We like to call this line “the line of support.” Basically, it is supporting the prices as they up-trend. So, what we are looking for is when the up-trend closes below support — in other words, breaks through support — on high volume. That is a very good indication that the up-trend is over for marketclub. In this case, depending on the market bias, I would either want to be selling my call options or buying put options. Let’s digress for a second and make sure you understand how to act based on the broad market direction. Here’s a general rule. Follow the masses to make The closing price is the jury’s decision the most gains. In other words, if the masses are putting money into the market, look at trades that make profit when stocks are going up in price. When the masses are taking money out of the market, look at trades that make profit when stocks are going down in price. It can be compared to the tides. We definitely don’t want to swim out when the tide is coming in. And, we don’t want to be swimming in when the tide is going out. We want the tide to work with us. We’ll get further along if we are swimming in the direction of the tide. Think about the salmon. When it’s time to spawn, a salmon swims up river against the current. It swims and swims and swims. The distance isn’t that great, but because it is swimming against the current, it takes a lot of time, which seems like an eternity to the salmon marketclub trading service. When the salmon finally reaches its destination, it is so tired and so beat up that it usually dies. We don’t want to be salmon. We want to live to trade again with a new coaching program. We want to swim with the current so we get further ahead each time then if we were swimming on our own. So, let’s go back to our example with the stock chart and the trend line. If the market bias was bullish — up-trending — then when our particular up-trending stock closed below its line of support on high volume, we’ll want to exit our call options trades. Now, if the market bias was bearish — down-trending — then when our particular up-trending stock closed below its line of support on high volume, we’ll want to enter put options trades. In the case of a neutral bias, if the market was sideways, then we could do either or both. We could exit our calls and open our puts, but in a sideways market, we have to realize that we are swimming under our own power and relying on the merits of the stock itself, since there is no market current rockwell trading. Because of this, when trading in a sideways-trending market, we have to lower our profit expectations. Please read that over again, if you need to. It’s very important. We’ll get further along if we are swimming in the direction of the tide Now, let’s look at the next case. When our stock chart is down-trending, we again connect the closing points of the price bars with a straight line — best fitting to hit the most closing points. We call that our line of resistance. The minute a stock bar closes above the line of resistance and there is heavy volume, we know that the trend has changed. In a bullish market bias, we’ll want to enter call options trades. In a bearish market bias, we’ll want to exit our put options trades. In a neutral market bias, we’ll want to do both or neither — depending on the circumstances. Okay, so what about a stock chart that is trending sideways? In other words, it’s moving horizontally. What about that? Here is what you do. The idea is to best fit the high closing prices with a resistance trend line and to best fit the low closing prices with a support trend line. In other words, you’re going to have a channel. Let’s say that price closes below our line of support on high volume. What we’re going to do depends on the market bias. In a bullish market, we’ll sell any calls we’re in. In a bearish market, we’ll buy puts. In a neutral marketclub, we’ll do both or none or some combination. Conversely, the price closes above our line of resistance on high volume. In a bullish market, we’ll buy calls; in a bearish market, we’ll sell any puts we’re in, and in a neutral market, we’ll do both or none or some combination. Correct? Yes, that’s it. Rockwell trading; That’s simple right? Of course, you can get more complex than that. You can look for specific price patterns. For example, if your prices are in a channel, but the line of support and the line of resistance are converging on each other, you get a price pattern that means the price is going to spring in one direction or the other when it hits the apex. You can look for upward breakouts or a swing up in price in a single day, and following that, a converging price channel that down-trends. We call that a flag pattern. That means price is going to spring up. You can know that a trend has changed by watching your line of resistance Conversely, if there is a downward breakout — a swing down in price in a single day followed by a converging price channel that up-trends — we have an upside-down flag pattern. That means price is going to spring down. If we have a single price bar that has an opening and closing price just about the same but the daily high is very high, we have a pattern called a Lincoln’s hat because it looks like Lincoln’s stove pipe hat on the chart per the INO marketclub stock patterns. Think about our analogy with a trial. If during the day we have a lot of upward pressure but, by the end of the deliberations, the decision is that our opening decision is where we will close at, then the downward pressure was too strong. Depending on market bias, that could give us a very good indication that the next day, we’ll see prices lower. Contrarily, if the opening and closing price is just about the same but the daily low is very low, we have a pattern called an upside-down Lincoln’s hat because it looks like Lincoln’s stove pipe hat upside down. Depending on the market bias, seeing that pattern from rockwell trading could mean that the next day, we’ll see prices lower. So, there are a ton of patterns to look at.

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