| The Investrio Wall Street Mentor Center Our Executive Mentors provide investor education, product enhancements and software solutions on how to become a more successful trader. Understanding the Stock Market The purpose of this article is to provide you with invaluable insights into the Stock Market. Today's Topic: SUPPORT & RESISTANCE Last week, we had a refresher on how to read trends. We talked about this previously when we discussed the broader markets. This same analysis can be applied to your historical charts. With these parameters in place, let’s move onto the first step of technical analysis: support and resistance. To understand support and resistance we need to think back to our high school or college days of Economics 101 and consider the forces of supply and demand. We learned that as demand increases and supply decreases, prices tend to go up. Conversely, as supply increases and demand decreases prices tend to move down. Stocks follow this same principle. When there is a lot of interest in buying a stock and little interest in selling that stock, prices tend to go up. As this occurs, it is said that a stock is under accumulation. On the contrary, when the majority of interest is in selling rather than buying, the price tends to go down. Under these circumstances, it is said that a stock is undergoing distribution. So how are levels of support and resistance formed? Think of stock prices as the result of a head-to-head battle between the bears and bulls. In the markets, the bears represent the sellers and the bulls represent the buyers. The winner of this daily battle is determined by the direction the prices actually move. So when the markets or a stock move lower, it is said that the bears were victorious. As prices move higher, the bulls are in command. The price at which a trade takes place is the price at which a buyer (bull) and a seller (bear) agree to do business. The buyer/bull is willing to buy because he believes the price will move higher. The seller/bear is willing to sell because he feels the price is more apt to move lower. In essence, the trade represents the consensus of their expectations. Working under these parameters, let’s consider the price movement or “action” of a few stocks to illustrate support and resistance. First, let’s look at a yearly chart for Micron Technology, Inc. (MU). During the shown period, notice how each time the stock fell to approximately the $18 level, the buyers (bulls) took over and prevented the price from falling any further. In other words, when it was trading at $18, buyers felt that investing in MU was a great idea. At the same time, the sellers (bears) were not willing to sell the stock for less than $18. This combination creates a level of support or a floor for the stock because the buyers are supporting the stock’s price at $18. If we consider support to be the floor of a stock or index, then resistance would be likened to the ceiling. A resistance level is the point at which the sellers take control of the stock price and prevent it from rising. This would be combined with the fact that the bulls are unwilling to pay a higher price for that stock. To illustrate this point, let’s again look at MU. Notice for the past year that each time this security approached the $58 level, sellers outnumbered buyers and prevented the price from continuing to move higher. Each time this scenario occurs, it causes this level of resistance to become stronger. Drawing lines on your historical charts to determine areas of past support and resistance will assist you in forecasting where the turning points are for your stock. This will help you determine the best place to get in and out. If you are planning on making money as a stock increases, find a stock that is finding significant support and is starting to trend upward. By using this strategy you will strengthen your positions significantly. In our next lesson, we will talk about some of the technical indicators used to assist in determining good entry and exit points. We will also integrate these indicators into the principles of support and resistance. If you have a question, comment or suggestion for one of our Executive Mentors, please CLICK HERE Investrio Wall Street Mentors |
 |
| INVESTRIO |
| stock trading software, trading software, stock option software, option trading software, stock software, day trading software, stock market software, stock control software, stock tracking software, stock charting software, stock analysis software, stock picking software, stock ticker software, stock management software, stock investment software, future trading software, commodity trading software, online trading software, swing trading software,buy stocks, stock, stock market, stock quote, new york stock exchange, stock prices, penny stocks, stock market quotes, stock ticker, stock options, stock charts, stock trading, buying stocks, online stock trading, stock symbols, stock reports, stock picks, stock research, stock screener, stock analysis, stock investment, online stock broker, stock and bond, real time stock quote, stock market news, stock tip, buy stock online, stock informationstock trade, stock market history, stock market chart, stock portfolio, stock market price, stock market ticker, discount stock broker, stock investing, stock index, stock news, investing, online investing, investing online, investing money, international investing, option investing, investing for dummy, investing in stock, investing basics, investing tip, stock option investing, woman and investing, investing for beginner, intl investing, beginner investingbetter investing, investing 101, online investing for beginner, start investing, investing in the stock market, internet investing, short term investing, investing software, introduction to investing, investing web site, investing for retirement, investing in commodity, investing on line, investing company, investing stock, investing your money, financial investing, smart investing, commodity investing, online investing tip, basic investing, social investing, investing strategy, investing beginner, global investing, work money investing, basics of investing, investing for woman, index investing, money investing, teach me to trade, stock market education, stock education, education investing, investment training, wize trade, datek, ameritrade, etrade, schwab, trading, online trading, day trading, online stock trading, option trading, future trading, commodity trading, trading system, forex trading, trading software swing trading, stock trading software, internet trading, trading stock, trend trading, trading online, stock trading system, stock option trading, day trading software, stock trading online, future trading system, option trading software, internet stock trading, trading future, trading option, tape trading, online future trading, commodity future trading, on line stock trading, trading strategy, active trading, day trading online, day trading stock, stock market trading, option trading system, day trading strategy, paper trading, stock trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, INVESTRIO, WALL STREET MENTORS, stock trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, INVESTRIO, WALL STREET MENTORS, stock trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, INVESTRIO, WALL STREET MENTORS, stock trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, INVESTRIO, WALL STREET MENTORS, stock trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, INVESTRIO,trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, INVESTRIO, WALL STREET MENTORS, stock trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, INVESTRIO, trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, INVESTRIO, WALL STREET MENTORS, stock trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, wize trade, INVESTRIO, stocks, wize trade investing, wize trade, stock, trading online, wize trade, online trading software, wize trade,INVESTRIO |
 |