Technical Analysis at Trade10.com- The science of trading market momentum for stocks, options, futures and bonds.

Critical Day Analysis

Our critical day analysis is all about trend reversals. We tell you when there is a high potential for a reversal of the short trend and we've been doing it since 1994 with an 80%* accuracy.

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Technical Analysis

is the study of price and volume that are present in the market to date. The aim of technically analyzing the market is to produce advanced warning of trend reversals and to provide supporting evidence of price continuation patterns through a look at the current supply and demand in the marketplace. Clearly what is known fundamentally about the current and future earnings environment, the economy and the potentials for corporate profit is reflected in some way in the daily changes of supply and demand. All of what is known to date, and what is perceived about the future, combines with the specific circumstances of the investor to produce trading decisions. Price and volume patterns often repeat over time as the process of news dissemination, market tone and psychological setting reoccur. Technical analysis is valuable in allowing us to perceive patterns, identify resolutions to patterns, look for confirming market action, or tell tale signs of changing supply and demand.

Our critical day research was created by us in order to pinpoint possible days where a trend reversal of the short trend is probable. When we talk about the short trend we are referring to the shortest segment of price that can be seen most clearly on a candlestick graph just before and after a critical day. We average 5 signals a month and since 1994 we have been able to achieve a success rate of better than 80%.* Technical analysis can be a great benefit as a tool to help spot and confirm trend reversals that are anticipated through our research. Throughout this site is a look at some technical concepts, that can help build a body of evidence to support trading strategies when combined with our critical day analysis.

In example 1 below the short trend for the S&P500 Index is heading higher into the Sept 28 critical day. You can see this more clearly by looking at the flow of the candlestick bodies leading into the critical day. Members had advance warning that a trend reversal may occur and begin to watch for other signs and indications of a reversal. The trendline penetration that occurs a day after the critical day confirms that demand is faltering. This combined with a strong understanding of the economic and fundamental forces that ultimately dictate long term trends in price is a strong navigational tool in the short term market. Example 2 shows the series of critical days given to members as the year 2000 got under way. Every blue dot is a successful critical day. The red dots are failed critical days.

To the right technical studies are examined in more detail to provide a sense of conformational evidence for traders of the critical day. Click on any of the terms to take a closer look at a technical discussion on that topic. All formations, patterns, indicators and technical tools fail at various times and so should only be used to build a body of evidence in forming a trading decision rather than being solely relied upon. There are a number of valuable studies that lead to intuitive understandings about price and volume but a strong compliment to technical analysis is an understanding of the trends and changes in the fundamentals and economic activity that ultimately lead valuation levels in the markets.

Trend Reversals

A trendline is an indication of levels of support and resistance in the market place. Price ranges, and extremes in price are smoothed in a way by using trendlines. In a fashion, trendlines help us to determine acceptable valuation levels during a certain time period.

Longer term trendlines can indicate the various support or resistance levels of price that is mutually agreed through free market operations. As time and conditions change, so do the perceptions and evaluations of value, which leads to penetration of previously held valuation beliefs. Penetration of a long term trend line is an indication of changing supply and demand and could point to a trend reversal

Price break from a pattern or indicator can lead to a trading opportunity through early recognition of a change in the basic supply and demand forces at work behind the market price. When looking at any pattern or indicator it is best to have confirmation of price and supporting evidence for the new direction of prices before making any trading decisions. There are many types of reversal patterns and indications of trend in technical analysis. Find and test the ones that conform to your trading horizon, risk level and personal circumstance as an approach to determining when changes in supply and demand become a tradable event.

Most Recent Signals

Application to Stocks	Application for Sector Analysis
Boeing (BA)	Computer Software Index
General Motors (GM)	Chemicals Index
JP Morgan (JPM)	Banks - Financial
Dow Chemicals (DOW)	Building Materials
IBM (IBM)	Aerospace
Texas Instruments (TXN)	Transportation
AT&T (T)	Computer systems Index
Phfizer (PFE)	Natural Gas Index
Federal Express (FDX)	North American Telecom
Veritas (VRTS)	Semiconductor Index
Intel (INTC)	30 YEAR BOND INDEX
Take a look at these Indices. Each are plotted with the past critical days on each graph.
Dow Jones Industrials	Nasdaq
Philadelphia Semiconductor Index	Russell 2000
S&P500 Index	S&P400 Midcap
Value Line	NYSE
Major Market	Bonds

Walk through a critical day

The graphs show a price plot of the Dow Jones Industrials from Sept 28/00 to early November. The First graph ends on November 3/00, two days before an upcoming critical day on November 7/00. Our members looking at the market are expecting a trend reversal to occur due to the high rate of success in our research. Ideally a member will be using their own skills to judge the supply and demand changes, using technical and fundamental indications to confirm suspicions of a reversal, and trade accordingly.
On the second graph we see that the price action on November 6 was a bullish day, reversing the short trend so that the short trend leading into the critical day is now up. A critical day is an expectation of a reversal of the short trend that immediately precedes the critical day. In the case of the November 7 signal, given to members 3 days before, is an indication that the upward moving trend, recognized at the close of November 6 is expected to reverse direction.
On the third graph we can see that November 7 was a low volatility after a large gain on November 6 of about 160 points for the Dow Jones Industrials. The subsequent move over the three days following the November 7 signal saw the Dow Jones Industrials fall 376 points. The next day, November 13, the Dow Jones Industrials lost an additional 83 points with intra-day low a full 609 point loss since the open on the critical day.

Most recent signals

A closer view of the most recent signals. You can see the short trend immediately prior to a successful critical day, reverses coming away from the critical day. Often a failed critical day will indicate a stronger bias in the market for continuation of the trend that was in place prior to the critical day. A failed signal can therefore provide as much information and opportunity as a successful one. Take a look at tech studies to develop a sense of trend reversals and use.

Tech Studies

Comparative Relative Strength

Congestion Pattern

Consolidation