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Continuation Patterns Work – And Here's Why

I learned about continuation patterns many years ago and it was an expensive lesson. Before I share that with you, let me explain to you what a continuation pattern is and what it does.

A continuation pattern is one where you have a move out of the base, which is called a breakout, and the market moves up rather sharply and then stops and move sideways. The reverse is true when a market breaks down from a top and then forms a continuation pattern to the downside. Traders in a bear market will either sell short or buy puts looking for the market to move lower.

Well, many years ago I was one of those rookie traders and it was a lesson that I've never forgotten to this day - don't try to pick tops or bottoms on continuation patterns.

Talking about a classic continuation pattern, the stock of Under Armour Inc. (NYSE:UA) broke out of a continuation pattern today. UA now looks poised to move much higher. I've talked about this stock before and pointed out that it was a continuation pattern to the upside in several of my previous videos, I hope you were able to catch the move. Certainly, the Trade Triangle technology did not miss this move and is sitting with some nice profits at the moment.

What has your experience been with continuation patterns? Do you trade them, or were you unaware of this recurring phenomenon? Either way, I would like to hear what you think. Leave your comments below this post.

Every success with MarketClub,
Adam Hewison
President, INO.com
Co-Creator, MarketClub

Poll: Are You Bullish or Bearish?

After a nice rebound the last two days, the market has once again come under pressure from Greece. Stocks opened lower today as negative news out of Greece is weighing on sentiment. The standoff between Greece and its creditors took a turn for the worse on Thursday, with both sides citing "major differences" over how to save the country from bankruptcy. This news has put pressure on the European and U.S. equities markets.

That begs the question....

How do you feel about the markets?

View Results

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As always, I would love to hear from you. Take a moment to vote and leave a comment about the markets.

Every success with MarketClub,
Adam Hewison
President, INO.com
Co-Creator, MarketClub

Are These Stocks Right For You?

Yesterday, I mentioned that I thought the lows seen in most of the major indices would be interim lows and I expected to see a bounce from those lows.

Today, we are seeing that bounce and I have three stocks that I believe you should be looking at, and perhaps buying, if they meet your risk profile.

I will show you why you should be buying these stocks and the exact rules I'm following to buy them. You will be able to mimic these same rules using the tools available to you as a MarketClub member.

The three stocks I'm looking at are: [Read more...]

Caution Advised, The Danger Flags Are Up!

Yesterday, the weekly Trade Triangles flashed warning signs on both the S&P 500 and the NASDAQ. This is the first indication we have had indicating that the intermediate-term trend for both of these indices has turned negative.

Now before you go selling everything, just remember this is not a major signal, it is just a warning sign that things may be going sideways to lower for a while. Look at the weekly Trade Triangles like the canary in the mine - if you don't exit the scene, there could be bigger trouble later on.

As many of you are aware, the markets have been moving sideways for quite some time now without any real solid direction. When you look at the broader picture, it would appear as though we are in a wide trading range, bound by the recent highs and lows that were seen in late March. [Read more...]

Poll: Are You Following The Healthy Eating Trend?

Many Americans are now turning away from fast and processed food and deciding to lead a healthier lifestyle. That lifestyle includes exercise and eating healthy food.

However, many of the popular health food stocks like Whole Foods Market Inc. (NASDAQ:WFM), Sprouts Farmers Market Inc. (NASDAQ:SFM) and Chipotle Mexican Grill, Inc. (NYSE:CMG) have seen their stock values decline rather dramatically since they all peaked in late February of this year.

I have a question for you today...

Have you changed your eating habits?

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Overall there appears to be a trend for people to eat less, consume non-processed food, and turn to a healthier lifestyle. Even Walmart and Target are getting into the act devoting whole sections of the store to health foods.

Why have health food stocks deteriorated for the last three months? It all has to do with perception as many investors got overly excited with the market getting ahead of itself. [Read more...]

Is This The End Of The Bull Market?

Today I'm going to be analyzing charts of the DOW, NASDAQ and the S&P500 and the potential divergence I see in those markets.

It's too early to tell if these markets are going to reverse down and calling tops is never easy, nor am I trying to do that in this particular posting. What I am doing, however, is bringing to your attention a potential problem and a potential opportunity.

What I mean by that somewhat contradictory statement is that these markets could go either way. However, the odds would still favor trading with the trend and the major trend in both the DOW, NASDAQ and the S&P500 continues to be to the upside.


In the three charts I have laid out today you can see the #1 and #2 quite clearly. #1 indicates that prices are going higher and #2 indicates that momentum is not following prices. This could be an early warning sign that things aren't quite up to par and as strong as I would like to see. [Read more...]

When Two Women Get Into A Fight, It's Never Pretty

This morning, Christine Lagarde, the boss of the International Monetary Fund, announced to the world that the Federal Reserve should hold off raising interest rates until 2016. I do not ever remember the head of the IMF ever saying anything like that before.

So the question begets, is she trying to save her own skin by doing a classic political move and pointing the finger at somebody else, in this case Janet Yellen, head of the Federal Reserve?

My advice on this, it's not going to be pretty and the IMF should take care of its own screw-ups (like Greece) before trying to fix the screw-ups in America.

With that said, let's take a look at what's really going on in the marketplace today. I'm going to look at the major indices with the Trade Triangle technology, which by the way is totally nonpartisan and unbiased, and just goes with the flow.

Here's what the Trade Triangle technology is saying right now. [Read more...]

The Banks Are Back!

Today, I'm going to be looking at the financial sector to see which of the banking stocks look the strongest.

Here is a list of the five stocks I will be analyzing: [Read more...]

2 Stocks To Watch This Week

This week, you may want to keep your eye on 2 stocks:

AliBaba Group Holding LTD (NYSE:BABA) and Under Armour (NYSE:UA)

Both of these stocks are in positive trends and have seen a recent pullback from their highs. Is this a good time to buy?

Let's start with the chart of AliBaba and go through the numbers.

Alibaba chart

1. We have a +85 Trend Score as both the weekly and monthly Trade Triangles are positive, indicating a strong upward trend.
2. $120 is the all-time high for this stock and that was shortly after its initial IPO.
3. Major negative force trend line.
4.- 5. Positive divergence on the RSI line versus negative price action.
6. Breakout over the negative force trend line.
7. Trend change with the monthly Trade Triangle at $91.88.

Strategy: [Read more...]

What Are The Big Trends?

Today, the last trading day of May, I'm going to be looking at where the markets are in comparison to the last trading day of April.

Traders sometimes lose sight of the big picture and big market trends. That's where the monthly charts come in and are so useful.

If you just look at the action today you might think the general market was down for the month. The reality is that it's not down and is higher for the month. At the time of this writing, the S&P 500 index is up 1% for the month. The NASDAQ is doing even better and is up 2.4% for the month of May. The DOW is also positive with a gain of 1.3%. In fact, if you look at the charts, the S&P 500 is going to close at an all time monthly high - if nothing dramatically changes from now until the close. The same holds true for the NASDAQ which will be closing at its best levels ever on a monthly basis. [Read more...]

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