Voodoo in Tech Stocks
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Voodoo in Tech Stocks

John F. Carter 1/8/2014

I'm back from Nevus. Thank you Henry for filling in while I was gone. Let's talk a little bit about -- we're going to look at BIDU on the daily chart and on a 78 minute chart. Now this one has got a lot stuff on it. I just love the squeeze, B wave, C wave's above zero. We've got a nice squeeze setting up, last symmetrical move was here. That would take us to the 161.8. So $191.00 dollars. This is actually setting up pretty good.

So I like this as sort of a longer term play, obviously selling puts on this is fine. But I actually like kind of coming in here, buying some calls, you know maybe about a month out and being able to sit tight.

Now for those of you that you know don't want to sit on something like this for a month, and you want to play the ebbs and flows, one of the things that it's very important to understand are the Voodoo lines. And you can see here this red line, this is the most powerful. OK. The green lines are the second most powerful. In this case you can see that that's right there. And so you have -- here let's do this here. It's got the most powerful is red, that's one. The second most powerful is green, that's two. White's the third most powerful and then the fourth is the little kind of purple lines which are kind of stopping points.

So if you look at this, we slammed into the red line which is the most powerful and then sold all the way off almost to the tee, OK to the treeline, which is the second most powerful, came back up to the red line, it stopped in its tracks. Then when we finally got through that -- bam -- was able to melt up to the third one, right, and that was right here. Came all the way back here almost to the dot, had a rally back up to one of the mid points there. It came almost to the dot and now, bam...we pushed back up and tested that again.

What I'm looking for is this squeeze. It'll actually take us to the next snow line which is 191. So these Voodoo lines are actually pretty helpful and they're on most of the major stocks. I mean if we look at say DDD...you know those are the key moving averages that I like to look at here. But you know if you look at how this had set up when we had the squeeze set up on the daily chart, we were on the red line which is the most powerful, and that just kind of dragged us up kicking and screaming to the green line which is the second most powerful. You can see here it just sold off pretty hard. So they make great targets. Let's look at some other ones like AMZN. I mean they're really clean on some of these bigger stocks. And you can see, and by the way these levels don't change. I mean they're the same here on the 78 minute chart as they are on the daily chart -- and this level's been here for years. And just in looking at this, here's the last, oh we kind of came up and then bam came all the way down almost to the tick, the snow line. And now looking for it to actually move up to the tree line there.

What other ones -- Amazon...let's look at GOOG. If you like trading the bigger stocks, same thing here. I mean a lot of times what will happen is you'll run up to one of these levels, consolidate, OK, and then when you get a squeeze like on a 78 minute chart they'll pop it up to the next one. So looking for a move to the tree line. Anyway, it just kind of goes on and on like this. We'll try one more...Visa. Kind of the same thing. I think as I recall it's kind of similar to Google where -- yeah, so we had the move, the daily squeeze took it from the snow line --third most powerful to the tree line there, which is the second most powerful. Now we've got a squeeze, so looking for a move back you know, up to the next key level there. So anyway, so it's a pretty fascinating concept.

If you are interested in learning more about these, going to have a free webinar on Thursday. OK. This will be this Thursday, January 9th at 8 o'clock east coast time, which of course is 7 o'clock central time. On this webinar I'm going to talk about how to identify key support and resistance levels, what exactly are the Voodoo lines, why you should care about the Voodoo lines, what are the Voodoo Lines telling us now especially about the major markets, in addition to the major stocks that we like to trade...if I can spell that correctly. And then my favorite trading strategies using these Voodoo Lines...especially open gaps. So this is something that's a staple on all my charts. You're going to see me use it all year long in 2014. And I think it's just useful to know exactly what I'm doing with them. So in this webinar that's what I'll be telling you. If you are interested in this again, free webinar just do your first name here email address here. Register now, you'll get the link sent to you and I will see you on Thursday night. Have a good one.