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67 Cards in this Set
- Front
- Back
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What usually sets the "tone" for the day?
What quote should you remember regarding this issue? |
1st hour of the trading day!
"The first hour of the morning is the rudder of the day" |
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On opening, the market has absorbed and digested what?
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Events that took place SINCE the PRIOR day's close!
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WHy does the close of the day usually produce heavy emotional involvement? What happens during the last hour? (3 things!)
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1)Many market players adjust their positions.
2)Traders decided whether or not to hold positions overnight. 3)Margin calls on the futures markets are calculated by their price at the close. |
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The CLOSE is a time of what?
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MAJOR COMMITMENT
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How do Candle charts show the "relative posture" of the bulls and bears? Explain this with an example.
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SIZE and COLOR of the Real Body.
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As far as "Relative Posture" of the bulls and bears, how does a Long RB convey this to the trader looking at the charts? What about Short RB's?
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Long RB translates into VERY STRONG opinion
Conversely, short RB mean the stock participants are NO STRONG OPINION. INDECISION |
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Explain what's happening between buyers and sellers when you see a CandleStick formation with a Small RB.
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Short RB mean the stock participants are NO STRONG OPINION (buyers hold price up while sellers hold price down)
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Real Bodies:
1. Long = _______ Opinion 2. Short = ______ Opinion |
1. STRONG
2. NO |
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Who "opens" the markets?
Who "closes" the markets? |
Amateurs = OPEN
Pros = CLOSE! |
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What is one of the first clues to the vitality of the market?
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Size and COLOR of the RB
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How do candle charts show the relative posture of the bulls and bears?
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Through the height and color of the RB
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The close is the time of what?
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MAJOR COMMITMENT
The closing price is used for many important calculations. |
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The close is the time of major commitment. Why? Explain why the close is is so important.
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The closing price is used for many important calculations.
Close is also a time when market participants decide whether to close out existing positions, hold current ones, or open new ones |
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We only want to initiate a new position provided that what?
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It's in the direction of the MAJOR TREND.
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Let's say there's a strong uptrend. Then it either consolidates sideways for a few sessions or moves down (retraces) to prior S. At this time you get a bullish candle signal. Okay to initiate a new position? Why or why not?
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OK! Since the major trend has been up, one can use the bullish candle signal to initiate a long position.
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A Bullish Candle signal in a bear trend should be used to do what?
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Either cover shorts or as an alert that the market may rally and to use that rally to sell since the major trend is down!
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Bearish or Bullish REVERSAL, does that imply the market will reverse from down to up (in the case of a bullish reversal) or from up to down (with a bearish reversal)?
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No. It just means that the mkt has gone from up to neutral (bearish candle signal) or from down to neutral (bullish candle signal). In other words, w/these reversal signals, odds of a turn have increased but not assured
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If a stock, for instance closes ABOVE a prior high, it means that market participants are willing to do what?
That means that they are what? |
PAY MORE for it right then, AND are willing to hold it overnight!
COMMITTED! |
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Does an intraday break of S or R have the same significance as a severing of S or R on a close?
Explain why or why not. |
NO! If it closes above prior high, it means they are Committed!
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Studying daily chart for stock: Image it's moved sideways in BASING MODE b/t $40-50 for last 5 weeks or so. Suddenly stock closes at $53 - what does this mean?
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-Bulls wrest control of the market!
-It means people are willing to BUY and HOLD the stock at a higher price. -The Mkt has est. a NEW DEMAND for the stock! |
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What is Nison's "Change of Polarity Principle"?
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Concept of Old R becomes new S & Old S becomes new R
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How can we use the shape of the C line for a B/O?
Give an example for clarification |
To see if the B/O is likely to be sustainable.
Ex. Small RB or doji at a new high could give us a little clue that the bulls are not in complete control! |
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To most effectively confirm a break above R what does Nison recommend?
Conversely, to confirm a break of S, what does he like to see? |
CLOSE ABOVE the R area
CLOSE UNDER the S area |
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One should remember that trends don't always end how?
In fact, how do trends usually occur? |
ABRUPTLY.
Slowly, in stages, as the underlying psychology shifts. |
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As you look at a chart evaluating Candles, what are the 4 steps you should go through? What ?'s should you be asking yourself to help get the "wheels turning"?
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1) Scan for potential Trend Changes (Major or Minor? How strong?)
2) Where are S&R? (Can take multiple forms!) 3) Where is U.S. CLOSING? (Esp in relation to S&R) 4) What C's do I see? Implications? (context of preceeding price action and mkt env?) |
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Japs call the candle's RB the "essence" of the price movement. Indeed, what else can furnish you with unique insights into the psychology of the stock market?
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LENGTH of RB's in RELATION to their shadows
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When we see a long lower shadow (for ex. like hammer), what does this show us VISUALLY SHOW US about the market action? What kind of "pressure"? And by the end of the session, what happened?
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1) Mkt "tested & rejected" LOWER prices...BUYING PRESSURE
2) By the end of the session, price action BOUNCED OFF of the LOWS! (and closed higher!) |
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When we see a long upper shadow (for ex. like SS), what does this show us VISUALLY SHOW US about the market action? What kind of "pressure"? And by the end of the session, what happened?
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1) Mkt "tested & rejectred" HIGHER PRICES...SELLING PRESSURE
2) By the end of the session, price action BOUNCED OFF the HIGHS! (and closed lower!) |
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What does a Shooting Start tell you? What is its "story"?
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Mkt is rising in an uptrend & perhaps becoming overbought. Finally, the bulls refuse to pay any more. The SS forms as the session opens near or at, what will turn out to be the LOW. It rises, but the bulls cannot sustain the demand. Bears come in and drive the prices back down. Long upper shadow = selling pressure
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Japs call the candle's RB the "essence" of the price movement. Indeed, what else can furnish you with unique insights into the psychology of the stock market?
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LENGTH of RB's in RELATION to their shadows
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When we see a long lower shadow (for ex. like hammer), what does this show us VISUALLY SHOW US about the market action? What kind of "pressure"? And by the end of the session, what happened?
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1) Mkt "tested & rejected" LOWER prices...BUYING PRESSURE
2) By the end of the session, price action BOUNCED OFF of the LOWS! (and closed higher!) |
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When we see a long upper shadow (for ex. like SS), what does this show us VISUALLY SHOW US about the market action? What kind of "pressure"? And by the end of the session, what happened?
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1) Mkt "tested & rejectred" HIGHER PRICES...SELLING PRESSURE
2) By the end of the session, price action BOUNCED OFF the HIGHS! (and closed lower!) |
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What does a Shooting Start tell you? What is its "story"?
How does a SS form? What is happening, in regards to market action, b/t the Bulls and the Bears? |
Mkt is rising in an uptrend and is perhaps becoming overbought... Finally, the bulls refuse to pay any more.
The SS forms as the session opens near or at, what will turn out to be the LOW. It rises, but the bulls cannot sustain the demand. Bears come in and drive the prices back down. Long upper shadow = selling pressure |
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What "Story" is revealed with the following? (>= 2 words!)
1) Small RB's 2) Long RB's 3) Shadows |
1) INDECISION
2) DEFINITE OPINION 3) Buying & Selling PRESSURE |
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In the context of an extended rally, what single candle line's appearance is MORE MENACING than that of a SS?
As a matter of fact, what single C line, in general broadcast extremely imp signals? |
Gravestone DOJI!
DOJI! |
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The ST warns us that what is happening with the market?
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LOSING MOMENTUM
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The mkt is at or near a new high - esp after a steep advance. Then a ST appears...
1)What could the emergence of a ST be a signal of? 2)What does this signal "caution"? |
1) Bulls are having trouble continuing their ascent.
2) Cautions that the PRIOR move is STALLING |
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Let's say there was a huge advance and a ST appears...
Does one session's small RB turn the trend from down to up? |
NO.
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What does a series of ST's or small RB's in the same S area show us?
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BEARS were unable to sustain those lows into the end of the sessions. This could lay a foundation for a potential rally!
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What does a series of ST's or small RB's in the same R area show us?
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Each time the market climbed to that price R, the bulls were not able to maintain the highs into the close. This would be a warning signal to those holding long positions
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How are the trading implications different for ST's seen at the end of a mature advance vs. at the same S area?
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1) Signal that the bulls are having trouble continuing their ascent.
2) Bears unable to sustain lows into the end of the session. Could lay foundation for potential rally. |
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When a High Wave candle emerges after a downtrend or uptrend, the Japs say the mkt has what?
Why? |
LOST its sense of DIRECTION
Cuz it LACKS Mkt ORIENTATION |
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When a High Wave candle emerges after a downtrend or uptrend, What does this mean for the prior trend?
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PRIOR TREND = IN JEOPARDY!
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Since the hammer is most useful after a sig. downturn, it should be noted that there may be what?
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SELLING on a rally from the hammer
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Since the hammer most useful after a sig. downturn, it should be noted that there may be selling on a rally from the hammer. Therefore, what must you be aware of?
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The 1st BOUNCE after the Hammer MAY FAIL, and the Market, MAY RETURN to TEST the Hammer's S!
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Why do we still need "bearish conf" before turning negative on the HM line?
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Although the small RB of the HM could give a little hint that the bulls are losing some momentum, its long lower shadow nonetheless keeps the trend pointing north
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What "Story" is revealed with the following? (>= 2 words!)
1) Small RB's 2) Long RB's 3) Shadows |
1) INDECISION
2) DEFINITE OPINION 3) Buying & Selling PRESSURE |
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In the context of an extended rally, what single candle line's appearance is MORE MENACING than that of a SS?
As a matter of fact, what single C line, in general broadcast extremely imp signals? |
Gravestone DOJI!
DOJI! |
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The ST warns us that what is happening with the market?
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LOSING MOMENTUM
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The mkt is at or near a new high - esp after a steep advance. Then a ST appears...
1)What could the emergence of a ST be a signal of? 2)What does this signal "caution"? |
1) Bulls are having trouble continuing their ascent.
2) Cautions that the PRIOR move is STALLING |
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Let's say there was a huge advance and a ST appears...
Does one session's small RB turn the trend from down to up? |
NO.
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What does a series of ST's or small RB's in the same S area show us?
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BEARS were unable to sustain those lows into the end of the sessions. This could lay a foundation for a potential rally!
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What does a series of ST's or small RB's in the same R area show us?
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Each time the market climbed to that price R, the bulls were not able to maintain the highs into the close. This would be a warning signal to those holding long positions
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How are the trading implications different for ST's seen at the end of a mature advance vs. at the same S area?
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1) Signal that the bulls are having trouble continuing their ascent.
2) Bears unable to sustain lows into the end of the session. Could lay foundation for potential rally. |
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When a High Wave candle emerges after a downtrend or uptrend, the Japs say the mkt has what?
Why? |
LOST its sense of DIRECTION
Cuz it LACKS Mkt ORIENTATION |
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When a High Wave candle emerges after a downtrend or uptrend, What does this mean for the prior trend?
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PRIOR TREND = IN JEOPARDY!
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Since the hammer is most useful after a sig. downturn, it should be noted that there may be what?
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SELLING on a rally from the hammer
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Since the hammer most useful after a sig. downturn, it should be noted that there may be selling on a rally from the hammer. Therefore, what must you be aware of?
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The 1st BOUNCE after the Hammer MAY FAIL, and the Market, MAY RETURN to TEST the Hammer's S!
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Why do we still need "bearish conf" before turning negative on the HM line?
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Although the small RB of the HM could give a little hint that the bulls are losing some momentum, its long lower shadow nonetheless keeps the trend pointing north
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What does a "one-sided" shadow mean?
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That an extended shadow appears on the top or bottom of the RB.
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What is sig about the low of a hammer?
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It's POTENTIAL S! Look for it to be confirmed!
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According to Martinez, what does a SS "suggest"?
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A minor reversal when it appears after a rally.
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According to Martinez, what does a Double Doji "imply"?
How does he classify the pattern? |
A forceful move will follow a B/O from the current indecision
NEUTRAL |
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What does a "one-sided" shadow mean?
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That an extended shadow appears on the top or bottom of the RB.
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What is sig about the low of a hammer?
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It's POTENTIAL S! Look for it to be confirmed!
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According to Martinez, what does a SS "suggest"?
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A minor reversal when it appears after a rally.
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According to Martinez, what does a Double Doji "imply"?
How does he classify the pattern? |
A forceful move will follow a B/O from the current indecision
NEUTRAL |
