A new Market Call is posted
every market day.
Momentum
Market Call™ for August 31, 1998
Contributed by Mark Seleznov, TrendTrader.com.
The purpose of this Market Call section is to educate
readers in technical analysis patterns and indicators. As
with all investment information, you need to research
information and consult your financial advisor before
initiating any strategies that are contained in Market
Call.
Also, you must realize that as with all trading
strategies, opinions can change quickly depending on
market conditions and developments.
Momentum
I am often asked, "What is Momentum?" Momentum
technically is the rate of change in prices measured over
a period of time. When prices are rising, your momentum
indicators will return a positive number above zero for
your stock or index. When prices in relationship to
momentum are below zero, prices are falling.
Many indicators other than Momentum will also attempt to
measure a rate of change in prices. One of these is the
MACD that you see here on a daily basis. It measures the
relationship of prices through 2 exponential moving
averages.
Currently we are seeing almost all stocks and indexes
exhibiting negative momentum and negative MACD.
The Russell 2000 Index is an example of how fast and how
far prices can fall. Since momentum turned negative in
mid July, this index is off 27%.
Can momentum be used as a contrary indicator? Yes it can,
but it is dangerous. Momentum can remain negative for
long periods of time. Bounces off lows or highs, can be
just bounces in a major trend.
Momentum can be applied to stocks, commodities, indexes,
and mutual funds. Currently most of these asset classes
are showing negative momentum.
This is not the time to stand in front of a moving train!
The markets are moving down. Some are moving down fast.
Wait for the train to stop. Jump on board when the train
is moving in your direction.
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Information
Mark
A. Seleznov is a General Securities Principal and
Managing Partner of Trend Trader, LLC, a NASD, SIPC
broker/dealer firm located in Scottsdale, Arizona. A
professional trader for over 25 years, Mark was a Market
Maker on the Philadelphia Stock Exchange, a Retail
Registered Representative, and futures trader. Mark is an
author and recognized expert in equity Day Trading. He
conducts seminars in Equity Day Trading and offers his
firm traders training and support. Mark writes articles
for market publications and Internet sites that focus on
trading.
Market Calls is a daily syndicated column on trading by
Mark A. Seleznov, Managing Partner of Trend Trader, LLC.
For information on obtaining Market Calls for your web
site, newspapers, or publication, contact Trend Trader, LLC at
602-948-1146
Disclaimer:
Trading in securities may not be suitable for all
individuals. Consult your broker or other professional to
determine your suitability. This is not an offer to buy
or sell securities. The advice given above is of a
general nature and should not be taken as a
recommendation to buy or sell the referenced security.
© Copyright 1998, BizFN.com. All rights reserved. This material is for personal use only. Republication and redistribution, including posting to news groups, is expressly prohibited without the prior written consent of BizFN.com. The content provided within the BizFN.com web site is provided for informational purposes only, and should not be construed as investment advice. At no such time should information contained on BizFN.com be considered an offer to buy or sell securities.