One way you can take prior price moves in the market and still use them as learning experiences after the fact is to scroll back on your charting, or cover up the latest price action, and advance or uncover it bar by bar as a strategy develops. This will give you a better feel for how it will look as it evolves instead of the more distorted version that seems "obvious" once you view the setup as a whole after it's followed through. I always like to try to use examples of strategies that haven't followed through yet when working with traders (such as the GBP/JPY correction) so that they can follow along as it does. This is always a great confidence builder not only in a system of analysis, but also to use as a great technique for advancing your own skills more quickly than most.
Nasdaq Composite (Figure 4)
The Dow Jones Industrial Average ($DJI) had a gain of 61.95 points, or 0.51%, and closed at 12,130.45 on Friday. Two-thirds of the Dow's thirty index components posted a gain on the day. The strongest were Intel (INTC) (+2.68%), Boeing (BA) (+2.18%), DuPont (DD) (+1.94%), JP Morgan Chase (JPM) (+1.68%), and Bank of America (BAC) (+1.65%). The weakest were Microsoft (MSFT) (-0.82%), Exxon Mobil (XOM) (-0.73%), WalMart (WMT) (-0.65%), and Procter & Gamble (PG) (-0.33%). The Dow ended the week lower by 2.10%.
The S&P 500 ($SPX) rose 13.78 points, or 1.05%, and closed at 1,319.88. The strongest sectors on Friday were the financials, materials, and technology, while energy was the best performer for the week and oil had its strongest week in two years with a gain of 13.7%. Industrials were the weakest. Meanwhile, the strongest individual performers in the index on Friday were Interpublic Group (IPG) (+8.18%), CBS Corp. (CBS) (+6.85%), Rowan Cos. (RDC) (+6.58%), and Valero Energy Corp. (VLO) (+6.57%). The weakest were JC Penney (JCP) (-6.54%), First Solar (FSLR) (-5.44%), American International Group (AIG) (-4.67%), and Perkinelmer Inc. (-4.40%). The S&P 500 ended the week lower by 1.72%.
The Nasdaq Composite ($COMPX) ended the session higher by 43.15 points, or 1.58%, on Friday and it closed at 2,781.05. The top percentage performers in the Nasdaq-100 were Autodesk (ADSK) (+5.74%), Marvell Technology Group (AIG) (+5.05%), Micron Technology (MU) (+4.86%), and Altera Corp. (ALTR) (+4.54%). Autodesk's (ADSK) gains followed its earnings report, which included a 23% increase in profit. The weakest were First Solar (FSLR) (-5.44%), Netflix (NFLX) (-1.27%), and Microsoft (MSFT) (-0.82%). First Solar (FSLR) announced that it expected weaker sales this year and would be cutting its prices after European subsidies expired. The Nasdaq Composite ended the week lower by 1.87%.
Unless otherwise stated, the index action described in this article relates to the E-mini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.
Toni Hansen is president and co-founder of the Bastiat Group Inc., DBA Trading From Main Street. Toni is one of the most respected technical analysts and traders in the industry. She has been trading and educating new traders, money managers, professional market analysts and traders throughout the boom and bust of the last decade. She has worked in conjunction with some of the world's top financial exchanges. Learn more about Toni Hansen and the educational services she provides through her website at http://www.tonihansen.com.