How to Learn Stock Chart Analysis

TRENDLINES -- or, remember Newton's First Law of Physics? '...an object in motion tends to stay in motion with the same speed and in the same direction unless acted upon by an unbalanced force.' Stock prices tend to follow short- and long-term trends. Look at the image of the chart next to this step. Which direction do you think the 'trend' is? Right, it looks like it's going up. If you can draw a line connecting three or more of the tips of the chart bars together, that can show the trend direction. Try it (yes, physically draw on paper!) on some charts you can find online for free, like at StockCharts.com. Remember, you have to be able to connect 3 or more bar tips!
CHANNELS -- If you draw a trendline on the top tips and bottom tips of chart bars and they form more-or-less parallel lines, this is called a channel. Stock prices tend to stay within channels, for a period of time. See the channel in the picture? If you extend those lines to the right, you may be able to predict what range the stock price may stay within for the immediate future. There are other neat things you can do with channels. Many times, if the stock price crosses over an upper or lower line, it may just be 'breaking out' of that channel and heading further in that direction! Draw some channels on your charts and see if that's what eventually happened.
SUPPORT AND RESISTANCE -- I have expanded the previous chart to the left, to show a longer-term view. Again, drawing horizontal lines that connect 3 or more bar tips, I have drawn a red support line and a green resistance line. 'Support' means that stock buyers tend to buy when it gets to that price (supporting any more downward movement) and 'resistance' means that stock sellers tend to sell when it gets to that price (resisting any more upward movement, see?). See how the price 'tested' the resistance line a couple times, crossed it a couple times unsuccessfully, and then finally broke up through it? This happens ALL THE TIME. Draw some support and resistance lines on some charts and see for yourself!
MEGAPHONE -- Many times, the upper and lower channel lines you draw will not be parallel. When the lines are broadening, that's called a 'megaphone' pattern. This suggests growing disagreement among the buyers and sellers as to what is a good price. Generally, if this happens after an uptrend, the likely next move is downward. Find some charts with this pattern and see what happened.
TRIANGLES -- Again, if the upper and lower trendlines are not parallel, and are narrowing, this is called a 'triangle' pattern. Obviously, the price will not continue narrowing indefinitely until it hits the apex of the triangle and then stop moving. We can sometimes predict what will happen when this pattern occurs. 'Ascending triangles', where the upper line is horizontal, signal a possible move up through the upper line. 'Descending triangles', where the lower line is horizontal, signal a possible move down. And a 'symmetrical triangle', where neither line is horizontal, well... this one could go either way!

How to Read Volume on a Stock Chart

Start with the information that appears across the top of the chart. The first items are the date the chart refers to along with the name and ticker symbol of the stock. Next, you'll find price information, giving the day's high, low and closing figures for the stock. Along with this, you'll read the volume on a stock chart. This is the daily volume of shares traded. There's usually one more piece of information listed, called the moving average. This is indicated by the letters MA followed by a number in parentheses and a price. This is the average price the stock traded over the number of days indicated by the number in parentheses.
Look at the rest of the stock chart. You will see two graphs, one in the middle of the page and a bar graph across the bottom. The one in the middle will consist of a line graph with the line bracketed by a bar (also called a candlestick) for each day the chart covers. This is really three graphs in one. Those bars don't refer to the day's volume but to the price range for the stock each day. The top of each bar or candlestick shows the daily high, and the bottom shows the low. The line graph itself shows the closing price.
Examine the bar graph at the very bottom of the page. This graph records the volume of shares traded for each day the chart covers. The height of the bar indicates the number of shares traded. Use the scale (usually located on the far left) to determine how many shares the height of each bar represents.
Learn how to read volume on stock charts in the context of the other information you see on the chart. Changes in the volume of trading can be very informative. For example, if you see an increasing number of shares being traded and the stock is in an upward trend, it indicates that investors are bidding up the stock price. An experienced trader will watch for a drop in that volume that may signal the upward climb in prices is reaching its peak.

How to Predict the Stock Market With Fibonacci

Learn the basics of the Fibonacci sequence, which starts with 1. Each successive number in the sequence is the sum of the previous two. Thus, the second number in the sequence is also 1 (1+0), The third number is 2, the fourth is 3, and the fifth is 5. The first 12 numbers in the sequence are 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144.
Note the significant ratios. Once you get beyond the first few numbers, the ratio of the larger to the smaller number in any pair of consecutive numbers in the sequence is around 1.618, the so-called golden ratio of mathematics, anatomy, woodworking and other disciplines. In stock market analysis, the percentages derived from the Fibonacci sequence are 61.8%, 38.2% (100%-61.8%) and 50%.
Create charts of a stock or index that you want to analyze using Fibonacci numbers. Look at one particular trend in the chart. For example, if a stock that is trading at $116 per share has been going up consistently since it stood at $100 per share, limit the chart to the period when the stock started moving toward $116.
Apply the ratios to evaluate a downturn. Check if the stock is going down more or if it is going back up. If the stock falls to $111 in one day (a 31.25% loss of the $16 upward trend), watch for it to hold above $109.89, which is 38.2% loss. If the stock stabilizes around that number, which is considered a support, it probably will go up. However, if it falls below that point, it is likely to fall all the way to the next support level, which is 50% or $108.

How to Invest in Stock Warrants

Understand the implications of leverage in warrants. With successful credit and market timing, returns can easily exceed returns for stocks. Use a spreadsheet program and in column one, insert the issue price of the warrant. In column two, enter the maturity date of the warrant. In column three, enter the current date. In column four, enter the exercise price of the warrant. Subtract column three from column four and compute the time to expiration. Assume that the warrant is below excise price and prorate the price of the warrant over time. This is the rate of decay of the warrant.
Recompute the time decay if the stock is trading above the exercise price. Subtract the difference between current price and exercise price. Subtract the remainder from the warrant price. The remainder is called the premium. Prorate the premium of the warrant over time remaining to calculate decay. Understand that this loss continues as expiration approaches. A rise in the price of the warrant is necessary to offset this guaranteed loss.
Understand that at maturity, if the stock price is not above the warrant excise price, the warrant expires worthless. Understand that warrants gain in value dollar for dollar above the exercise price. Thus, for experienced investors, warrants can create exceptional investment opportunities.
Know the conversion terms of the warrant. One warrant may represent more or less than one share of stock. Probably the best market maker for buying or selling warrants is the investment bank that represented the issuer. Warrants trade irregularly. Thus, technical trading is not useful. Use fundamental analysis for warrant trading. Know that when warrants are redeemed, the capital structure of the firm is improved, but earnings per share decline.
Invest in warrants only after careful credit study. Warrants are often issued when companies come out of bankruptcy as 'sweeteners' to interest investors in the bankrupted companies' bonds. Detach warrants from such an offer and trade the warrants or the bonds to your advantage.
Invest in warrants as a low-cost alternative to buying stock. Warrants have limited downside, but, like options, they do decay over time. Traders buy warrants when they like the underlying opportunity, but are uncertain about near-term market conditions. Warrants are volatile and should be used for investment and not trading purposes. Warrants cannot be used as a proxy for stock as the underlying security in option trading, further limiting their value as a trading vehicle.

How to Stock Your Kitchen with Staples

Stock up on dry goods. These are the staple of the nothing-to-eat kitchen. Flour and baking powder are essential basics. Beans of all varieties are great non-perishables--black, navy, limas, pintos, lentils. Rice and couscous are cheap by the pound, expand when cooking so you get more bang for your buck and they both last incredibly long. Chicken and beef broth have an incredibly long shelf life and are a great flavorful substitute in most cases where water is called for. Dried fruits make for good snacks, and add a nice touch to salads. Canned vegetables, sweeteners and peanut butter round out some of the dry-good necessities.
invest in herbs and spices. These can be expensive in a one-off purchase, but small doses are called for, so they last fairly long. They also add great flavor. Stock up on classic, go-with-everythings like basil, pepper varieties, seeds, thyme, salt, oregano and cinnamon. Bay leaves are wonderful addition to soups, broths and most liquid-based cooking methods. Other herbs and spices to build up on are cumin, fennel, ginger, nutmeg, peppercorns and chili powder.
Use your refrigerator and freezer to your advantage. Condiments--mayo, mustard, ketchup--last for ages. you can extend the life of your coffee grounds by months if you freeze them (and they still remain relatively loose). Frozen berries are the best type of fruit to stash in the freezer. Bread crumbs, broths and nuts live much longer in your kitchen if placed in the refrigerator after the container is popped open. Many cheeses also have a long refrigerated shelf life, but not all do, so check to be sure before purchasing.