As of 09/25/2020
  Indus: 27,174 +358.52 +1.3%  
  Trans: 11,270 +152.52 +1.4%  
  Utils: 808 +12.20 +1.5%  
  Nasdaq: 10,914 +241.29 +2.3%  
  S&P 500: 3,298 +51.87 +1.6%  
YTD
-4.8%  
 +3.4%  
-8.1%  
 +21.6%  
 +2.1%  
  Targets    Overview: 09/14/2020  
  Up arrow28,650 or 26,000 by 10/15/2020
  Up arrow11,750 or 10,600 by 10/01/2020
  Up arrow845 or 775 by 10/01/2020
  Up arrow11,800 or 10,400 by 10/01/2020
  Up arrow3,600 or 3,200 by 10/01/2020
CPI (updated daily): Arrows on 8/18/20
As of 09/25/2020
  Indus: 27,174 +358.52 +1.3%  
  Trans: 11,270 +152.52 +1.4%  
  Utils: 808 +12.20 +1.5%  
  Nasdaq: 10,914 +241.29 +2.3%  
  S&P 500: 3,298 +51.87 +1.6%  
YTD
-4.8%  
 +3.4%  
-8.1%  
 +21.6%  
 +2.1%  
  Targets    Overview: 09/14/2020  
  Up arrow28,650 or 26,000 by 10/15/2020
  Up arrow11,750 or 10,600 by 10/01/2020
  Up arrow845 or 775 by 10/01/2020
  Up arrow11,800 or 10,400 by 10/01/2020
  Up arrow3,600 or 3,200 by 10/01/2020
CPI (updated daily): Arrows on 8/18/20

Bulkowski's Ameritrade Trading Quiz

 

Released 6/22/2020.

Ameritrade: Trading Quiz

Below is a slider quiz to test your trading ability. It's based on an actual trade I made. Captions appear below the pictures for guidance, so be sure to scroll down far enough to read them.

 

1 / 4
chart pattern
What chart patterns can you find? Look for the following: triple bottom, 2 triangles, 2 head-and-shoulders, and the start of a Big W.
Answers are on the next slide.
2 / 4
chart pattern

The stock has not confirmed the triple bottom nor if you interpret the three bottoms as a head-and-shoulders bottom.

Question 1: Do you buy, short, or avoid trading this stock?
Question 2: If trading this one, what is the target price?
Question 3: If trading this one, what is the stop price?
The answers appear on the next slide.
3 / 4
chart pattern
Answer 1 (Do you buy?): As I look at it now, I think I'd wait for confirmation - price to close above the highest high in the triple bottom or above the down-sloping neckline. Usually, price continues down before reaching confirmation, so taking a position now seems risky.
Answer 2 (Target price?): Measure the height of the triple bottom from highest peak to lowest valley in the pattern and project upward from the highest peak to get a target price of 12.85.
Answer 3 (Stop price?): Place a stop below the right shoulder low or the head low, that's either two of the last minor lows shown on the chart. Volatility is 66 cents, so a stop placed no closer than 9.95 would work best. The May low is at 10.05, so it's too close. The head is at 9.91, so that would be a better choice.

Here's my notebook entry for the trade.

"Date: 5 May 2005. Filled at: 10.78. Stop: 9.89 (that's 2 cents below the head low).
Upside target: 14, site of Dec 2004 high, or high at long-term down-sloping trendline drawn from Jan 04 high to Dec 04 high.
Future S&P direction (guess): Up
Buy reason: Triple bottom. Early entry before confirmation, but it also lowers the stop distance, which is below the center peak. My gut feeling is that this triple bottom won't confirm and the price will drop, stopping me out."

Three days later (8 May), I moved the stop at 9.89 to 10.17.

As you can see, the day after I bought the stock made a large up move and a day later (9 May), it gapped upward on a takeover rumor. Price has climbed 24% in just 2 trading days.

Question: Do you hold, buy more, sell, or sell short? My answer appears on the next slide.
4 / 4
chart pattern

Here's my notebook entry for the sale.

"Date: 9 May 2005. Filled at: 13.50 and 13.49.
Sell reason: Inverted Dead-cat bounce. I sold this on the rumor of a takeover offer from E-Trade. My research in these large 1-day gains suggests a decline in the coming weeks. Best to get out now with a 25% gain in 3 days."
As you can see, a 25% gain in 3 days was delicious, but nothing like the gain I could have made if I sold at the very peak, 22.25, a potential rise of 106%. Oops.
The end.

See Also

 
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