Daily Chart: On the daily the next line of resistance is the 200SMA which is at 71.04 and the 5 period EMA is still above the 10 period SMA
Weekly Chart: On the weekly, the next line of resistance is the 50 period SMA, which is at 80.25
Based on the above 2 charts, I will monitor the stock and possibly sell the option when the stock reaches 70 or 80
Order:
Total Transaction: 1380.24Account Balance: 2278.83(the balance is higher because the option has gone up before I was able to finish this post)
For those of us who are not yet familiar with how to read the daily and weekly charts that monitor the stocks, could you simplify the best way to read and understand what we are viewing by defining EMA and SMA and other terms used?
ReplyDeletesure...
ReplyDeleteSMA - simple, or arithmetic, moving average that is calculated by adding the closing price of the security for a number of time periods and then dividing this total by the number of time periods. Short-term averages respond quickly to changes in the price of the underlying, while long-term averages are slow to react.
EMA - A type of moving average that is similar to a simple moving average, except that more weight is given to the latest data. The exponential moving average is also known as "exponentially weighted moving average".
I really don't care much for how the moving averages are calculated, I just use them to determine support and resistance for a stock. For instance, the RIMM charts above show the 200day SMA(Simple Moving Average) as being around 71. When the stock reaches that point you will probably see some indecision. This isn't always the case though. Sometimes stocks will shoot straight through support or resistance.
Also, the 5 period EMA and the 10 period SMA can be used as buy and sell signals. When the 5 EMA crosses above the 10 SMA, then that is a buy signal. When the 5 EMA crosses below the 10 SMA, that is a sell signal. Let me know if that helped
Definitions from investopedia -
ReplyDeletesupport - The price level which, historically, a stock has had difficulty falling below. It is thought of as the level at which a lot of buyers tend to enter the stock. Often referred to as the "support level".
resistance - The price at which a stock or market can trade, but not exceed, for a certain period of time. Often referred to as "resistance level".
Simply put, at the support level the buyers start to outnumber the sellers and at the resistance level the sellers outnumber the buyers
It helped;)
ReplyDelete