Posted in
Daily Report
By: Tom Gentile
on August 1st, 2022
Momentum as Seen on a Stock Chart
When looking at a chart one usually tries to assess a direction that the market is trading and tries to determine if that direction can continue or will it stop or at least stall at a certain price area.
If one feels a security can continue it may be because the chart shows momentum in a specific direction, higher or lower.
Momentum is seen as a security’s chart experiencing a series of higher highs and higher lows.
One can draw a trendline connecting the low points and high points and see if that trend ‘channel’ is sloping higher or lower.
Quick Education on Stock Price Resistance
Resistance on a chart is the price point or price area the stock trades to and ‘Resists’ going any higher.
It may see the security roll over or at least stall at resistance before people stepping back in to buy it at the resistance price or more, which would cause what’s called a breakout.
Take a look at the SPY or whatever chart on an index you use to gauge overall market direction and make an assessment, either on your own or with your broker and then decide if you want to trade in a bullish or bearish fashion.
Once you do consider looking at the Morning Reports Lists to see where the call and put options activity is.
App: Toms Option Tools
Market Insight articles may show images of lists of stocks meeting a variety of options parameters like Unusual Call and or Put activity or Expensive IV found on my app Toms Option Tools.
Other times I will have other charts may work to amplify my educational points.
Those options data lists, however, can be found on my app Tom’s Option Tools. Use your device to search up and download this app and get free access to the Morning Reports section of the app.
Other parts of the app are available at a premium subscription rate, but the Morning Reports Lists are yours free.
Disclaimers
Stock and options trading has large potential rewards, but also large potential risk.
You must be aware of the risks and be willing to accept them in order to invest in the stock and options market. Do not trade with money you cannot afford to lose.
This is neither an offer to buy/sell/ or recommend a particular stock or option.
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 been actually executed, the results may have under or overcompensated 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 hindsight.
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