Volume is Validation

Just in case you missed yesterday’s e-mail and are wondering “Hey, who’s this guy?” …

Before we begin today’s commentary, I’d like to take a moment and introduce myself. My name is Michael Saul and it’s my pleasure to {virtually} meet you. I’ve been trading the financial markets since the mid-1990s. I dove head first into studying price charts, devouring everything on technical analysis I could get my hands on. I moved on to trading stocks in 1999, and started trading options in 2000. The one thing I’ve discovered through it all is you can never stop looking for new ways to gain an edge in the market. That’s how I discovered Chuck Hughes, and I’ve been an avid follower of his ever since. It’s my privilege to write this newsletter for you and I hope you enjoy reading my research analysis as much as I enjoy writing it.

Moving into today’s chart(s) of the day…

Yesterday, we took a look at charts for SPDR Gold Shares (GLD) and saw that while we were in a strong long-term trend, the time wasn’t right for a fresh entry.

Today, we’re going to take a look at two different charts for FedEx Corp. (FDX).

With 324,000 employees, FedEx provides transportation, e-commerce, and business services worldwide.

Now, before we get to the FDX charts, I want to talk about a famous Wall Street saying…

“Volume is validation.”

This means when volume is confirming the direction price is moving, the chances of it continuing in that direction are much greater.

One of the best ways to analyze volume is by using the On-Balance Volume (OBV) indicator on our charts.

Introduced to the world by Joe Granville in 1963, OBV combines both price and volume to give a much more complete picture of how powerful a trend is.

Take a look at the chart below:

Validation Behind the Move Higher in FDX

Notice how the OBV line has been moving higher and hit a new high along with price? This is validation the uptrend is strong, and we should watch for buy entries on FDX.

So, is it time to jump in FDX now?

No. And for the same reason as yesterday’s analysis on GLD showed us.

Take a look at this chart below:

Staying on the Sidelines… For Now

See how price is OUTSIDE the Upper Keltner Channel? This signals the stock as overbought, and according to the PowerTrend system, it’s not a good time for a fresh entry.

Let’s add this one to the watchlist and wait for a prime entry after a pullback or pause occurs.

See ya tomorrow!

Trade smart,

Michael Saul
Analyst, Chart Of The Day

Chuck Hughes

Written By Chuck Hughes

Before Chuck Hughes won 10 Trading Championships, he was an accomplished Air Force pilot. In fact, he credits his success as a stock and options trader to his disciplined upbringing and career. When he was deciding between a career in the Navy and a career in the Air Force, the Navy told him he’d only have a 33% chance of flying jets. The Air Force gave him 100%. He liked those odds better. 35 years ago, Chuck had a wife, a young daughter, a son on the way, and a huge mortgage to afford. He didn’t want to give up on his lifelong dream and stop flying for a major commercial airline. He knew he needed to supplement his income during the 15 days a month he wasn’t flying. So he used his experience in discipline and math, and his understanding of finance and the stock markets (which he’d always been interested in,) and opened a $4,600 trading account. He made over $460,000 in profits his first two years of trading, and he hasn’t looked back since. When he was diagnosed with Meniere’s disease 15 years later, which commonly leads to vertigo…He knew his career as a pilot wouldn’t last much longer with those odds. But he didn’t have to scurry to find another gig, or panic about how his family would eat… He’d spent the last 15 years perfecting his system and raking in cash. As an options trader, Chuck does not let his emotions get in the way of his trading strategy. He adheres to disciplined and methodical options and stock trades. Because he respects the options game so highly, and understands the true freedom that financial solvency can bring, Chuck was able to design and refine his system and win those 10 Trading Championships. Put simply, Chuck Hughes’ trading strategies work, and in all types of market conditions. They’ve worked throughout the bull, bear, and flat markets America has seen in the last 30 years. Chuck Hughes has spent that time building a reputation as one of the most trustworthy options traders in the industry. His publishing group Legacy Publishing LLC was one of the few trading groups on the planet to have correctly predicted and profited from the 2008 financial crash .As a published author 16 times over, a 10-time Trading Championship winner, and an options-trading teacher for 25 years, he’s learned to trade and teach without an ego.