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"Let's Talk Charts"

For today, I thought we should show how charts can help us make trading decisions. 

NASDAQ
The NASDAQ has been consolidating in a narrow trading range. We ought to be short-term bullish, on a break above 1364, or, short term bearish on a break below 1327.

NASDAQ 100 (QQQ):
Based on the consolidation pattern, I would go long on a print above 34, with a stop at 33, or, short on a print below 33, with a stop at 34.

Telecom iShares (IYZ):
Notice the tight consolidation range. We would be looking to buy on a break-out of the range.

Bank Regional Holders (RKH):
This one shows a rather "toppy" pattern, thus, we are looking for the "gap" to be filled in the 115 area in order to short it.

Unitedhealth Group Inc. (UNH):
Once again, we can see how to use a narrow consolidation zone in order to initiate a trade. In this case, we are looking for a break down from the range in order to go short.

Dominion Resources, Inc. (D):
Same type of situation with Dominion. Narrow flat consolidation patterns tend to provide quite reliable entry/exit points.

Internet Initiative Japan, Inc. (IIJI):
Lastly, we have one of the best known and most bullish chart patterns: a "flag." Notice that if we connect the highs and the lows, we get a pattern that looks like a "flag." A break out of the "flag" sets a minimum upside objective of 2.5 points. That is almost a 30% gain!

(Charts are courtesy of ChartSmarts.com, a combined publication of Aegean Capital Group and Equity Guardian Group, LLC. All rights reserved, reproduction strictly prohibited.)

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