{"id":88527,"date":"2016-04-22T07:15:47","date_gmt":"2016-04-22T11:15:47","guid":{"rendered":"http:\/\/countingpips.com\/?p=88527"},"modified":"2016-04-22T07:15:47","modified_gmt":"2016-04-22T11:15:47","slug":"whats-more-important-than-earnings","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/04\/whats-more-important-than-earnings\/","title":{"rendered":"Whats More Important Than Earnings?"},"content":{"rendered":"
April 22, 2016<\/div>
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By WallStreetDaily.com<\/u><\/a> \"What\u2019s<\/p>\n

If you\u2019re a trader of stocks, I\u2019d be willing to bet that you keep a close eye on earnings.<\/p>\n

With good reason, of course: A stock\u2019s price almost always follows the same path as its earnings.<\/p>\n

Personally, however, as a chartist, I\u2019m much more interested in a stock\u2019s price action than its balance sheet.<\/p>\n

Specifically, I watch to see how shares react<\/em> to earnings before making any moves.<\/p>\n

Because, while fundamentals are important, of course, they\u2019re reflected in the share price.<\/p>

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In conjunction with forces of supply and demand, fundamentals drive a stock\u2019s price action.<\/p>\n

When a chart is broken down into its most basic factors, everything comes down to these two simple elements.<\/p>\n

A Dynamic Duo<\/h2>\n

If you\u2019ve been following my reports, you may have noticed that I often write on the subjects of support and resistance.<\/p>\n

They\u2019re the bedrocks of technical analysis<\/a> \u2013 better known as the study of securities, using historical price and trend data.<\/p>\n

Support and resistance are, simply put, boundary levels on a stock\u2019s chart, to which its price reacts.<\/p>\n

A stock is always bouncing off support and slamming up against resistance. The so-called war between the bulls and the bears plays out at every such boundary.<\/p>\n

For instance, when it\u2019s reported that a stock is \u201cbreaking out,\u201d the bulls have pushed it above its projected resistance. Conversely, when a stock \u201cbreaks down,\u201d the bears have dragged it below support.<\/p>\n

If a trend holds, however, previous measures of resistance will often become support, and vice versa.<\/p>\n

Some common recurring levels include round price numbers ($10, $20, $50, $100), popular simple moving averages (20, 50, 200), and 52-week high-lows.<\/p>\n

What makes these levels so powerful at controlling price action?<\/p>\n

They don\u2019t have much intrinsic value based on numbers alone, but much of their influence comes down to market psychology.<\/p>\n

Traders are taught to know that a significant number of buyers and sellers will be waiting to trade at these key points.<\/p>\n

Nevertheless, it\u2019s more important not to get caught up in the reasons behind fluctuating individual support and resistance levels.<\/p>\n

Rather, let\u2019s talk about how<\/em> to put these margins to work for you.<\/p>\n

Follow the Footprints<\/h2>\n

A stock in an uptrend will test many points of resistance as it ascends the chart.<\/p>\n

When shares finally break through resistance, a rush of new buyers will come into the market in hopes of making a quick buck. Resistance, therefore, becomes support and sets a new floor.<\/p>\n

The stiffer the resistance, the more significant the new support level will be within the market.<\/p>\n

This means a breakout above<\/em> resistance can be a great buying opportunity, because shares enjoying new support can rear a substantial profit.<\/p>\n

On the other hand, a stock in a downtrend tests many support levels as it falls, pushing up against its own boundaries. If you\u2019re looking to take the short side of shares, a fresh breakdown below a support line can represent a fantastic selling opportunity.<\/p>\n

Thus, both the \u201cbreakout\u201d and \u201cbreakdown\u201d offer opportunities to profit. It\u2019s just a matter of understanding your openings.<\/p>\n

Best of all, you can apply these concepts to almost any charted financial security.<\/p>\n

Stay tuned: Next week, we\u2019ll break down the pivotal breakout of the S&P 500 using what we\u2019ve covered today.<\/p>\n

In the meantime, keep your eye on the market as it reacts to earnings, rather than just the earnings, themselves.<\/p>\n

On the hunt,<\/p>\n

Jonathan Rodriguez<\/p>\n

The post What\u2019s More Important Than Earnings?<\/a> appeared first on Wall Street Daily<\/a>.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

By WallStreetDaily.com If you\u2019re a trader of stocks, I\u2019d be willing to bet that you keep a close eye on earnings. With good reason, of course: A stock\u2019s price almost always follows the same path as its earnings. Personally, however, as a chartist, I\u2019m much more interested in a stock\u2019s price action than its balance […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-88527","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/88527","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=88527"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/88527\/revisions"}],"predecessor-version":[{"id":88537,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/88527\/revisions\/88537"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=88527"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=88527"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=88527"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}