Login

Subscribe   My Account  

Login
Username:
Password:
Remember Me
Login securely
 
Important Updates for Investors

Shipping Stocks Are Starting to Rebound
Don't miss the chance for double-digit yields and a stunning upswing.

Use Buffett's 'Snowball' Effect to Dig Out of the Bear Market Today
Strong dividend-payers provide the cash to get your portfolio rolling again.

7 Steps to Protect Your Portfolio from the Wall Street Crisis
Special report gives you a step-by-step plan to rebuild your portfolio with stable securities yielding 20.2%, 22.4%, and even 33.1%.



Skip to a different definition:

A - B - C - D - E - F - G - H - I - J - K - L - M - N - O - P - Q - R - S - T - U - V - W - X - Y - Z


Springs and Upthrusts

UNDERSTANDING SPRINGS AND UPTHRUSTS IS A TECHNICAL ANALYSIS MUST

When is a break of support bullish and the breaking of resistance bearish? When these events turn out to be either springs or upthrusts, the name given to these technical patterns by legendary technician Richard Wycoff.

Both springs and upthrusts are examples of false breakouts and can trap the unsuspecting trader. Both patterns quickly reverse and the stock then often tests the opposite end of the trading range. A spring is a false breakout to the downside. It is so named because prices "spring" back. An upthrust is the opposite event--prices temporarily break out above resistance only to retreat almost immediately after.

The quality of the spring or upthrust can be judged by an examination of the degree of penetration of support or resistance and the volume on the day this penetration occurred. These four scenarios are possible:

-- Large penetration on large volume
-- Large penetration on small volume
-- Small penetration on large volume
-- Small penetration on small volume

For a spring, a small penetration on small volume is bullish since it indicates there are few sellers who are willing to give back their shares below support. For an upthrust, a large penetration on large volume is bearish because it shows that the bulls could not sustain higher prices despite the activity.

Springs and upthrusts both provide the swing trader with good opportunities. A stop loss can be placed just below or above the extreme of the day the spring or upthrust occurred. A target is also created since the stock is likely to test the opposite end of the trading range.

A good recent example of a spring occurred in the stock of Linear Technology (LLTC, $36.22). Since June, LLTC has been in a rectangular trading range with resistance at $40 and support at $34.50. Despite this consolidation, however, the stock, like most semiconductor shares, has been trading below a declining 150-day moving average characteristic of a stage IV decline.

On Wednesday, LLTC broke support trading down to an intraday low of $34.01 before recovering near the close to end the session at $34.50. The candle was a high wave, with a small real body and large upper and lower shadows. High wave candles indicate a war between the bulls and bears with neither side being able to claim victory. Volume on the day was about 7.5 million shares, about 50% larger than normal. I would classify this session as a small penetration on large volume. It made the stock worth watching in the following sessions.

On Wednesday evening, Texas Instruments held its mid-quarter update. Although its forecast was not that strong, it served as a catalyst for what appears to be a violent short-covering rally in beaten down chip stocks. LLTC rallied with the group and finished Friday's session at $36.22, springing back more than $2 from Wednesday's low. The stock is now challenging a downtrend line from its late July high of $39.74. If it can break that trendline, a movement back into the upper end of the trading range near $40 appears likely.

A knowledge of springs and upthrusts turns false breakouts from threats into opportunities. As a swing trader, you should always watch what happens after a breakout to confirm the stock is behaving as it should. If it isn't, the issue may still provide an excellent trading situation if you spot a spring or upthrust in the making.

Good trading!



Dr. Melvin Pasternak
Editor
The StreetAuthority Swing Trader


If you have not yet tried my weekly trading newsletter, then you can begin your training right now by signing up for a FREE three-week trial to the StreetAuthority Swing Trader. Sign up today and you'll also receive a complimentary five-part swing-trading course -- "Swing Trading Done Right: The Secrets to Putting the Odds in Your Favor." Please click on the link below to receive my newsletter absolutely FREE for three weeks -- https://www.StreetAuthority.com/freetrial-st.asp

We offer this trial to you completely hassle-free. We do not require any credit card information from you and we will not share your name or email address with any third parties. Moreover, should you choose NOT to subscribe to this newsletter at the end of your FREE trial, then simply do nothing -- we will cancel it for you. With this in mind, we invite you to sign up for a FREE trial to the StreetAuthority Swing Trader. Sign up today!

https://www.StreetAuthority.com/freetrial-st.asp


 

11 Surprising Investment Predictions for 2009
A wind-powered car . . . oil at $160 per barrel . . . a +200% to +300% rebound in shipping stocks... a war fought over water . . . these are just a few of the startling predictions that StreetAuthority Market Advisor has just revealed for 2009.  Each of these developments will trigger explosive profits for investors in the coming year.  Click here to see our full range of forecasts.

Income Security of the Month -- January 2009
If you're looking for high yields, monthly payments and unprecedented safety, then you need to learn more about our "Income Security of the Month" for January 2009.  This stable preferred stock has a long track record of paying some of the most dependable dividends in Wall Street history.  It pays a monthly dividend totaling 9.9% annually and has outperformed the S&P 500 by more than +52% over the last year.

 

The Top Stocks to Own Before Obama Takes Office
Whenever Washington decides to help a new industry get off the ground, the investment profits follow in lockstep.  And a small group of 20 to 30 stocks is going to be flooded with so much new government cash that our research team believes a few of them could shoot up 40-to-1 in the next three or four years.  This group of investments was a good bet even before Obama was elected . . . now it's a slam dunk. 

Wall Street Meltdown Creates Highest Dividend Yields in a Decade
The recent Wall Street crisis has created a once-in-a-lifetime opportunity for investors like you to lock in high yields on safe, low-risk stocks. Yields of 20.2% . . . 22.4% . . . even 33.1%!  Our new special report on the subject shows you SEVEN dividend superstars that can help you rebuild your portfolio.  Click here to get your free copy of the report.




6 Free Months of Bernie Schaeffer's Option Advisor
Learn the secrets of successful options trading from top trader, Bernie Schaeffer. Start your free 6-month subscription to The Option Advisor newsletter now and get free online access to Bernie's Crash Course in Top Gun Trading Techniques.

3 Penny Stocks Poised to Soar 300%
By the time Wall Street notices the 3 picks revealed in this report, you could be sitting on a fortune.  Click here to get immediate access to an exclusive Free report -- "3 Underground Penny Stocks Poised to Soar."

 

Investor's Business Daily (IBD)
Get 10 Free Issues of Investor's Business Daily (IBD) – Plus 2 Free Weeks of Investors.com

Capture 22.8% Yields and +701.8% Gains with ETFs
Join exchange-traded fund (ETF) expert Nathan Slaughter's "V.I.P. List" and get these three members-only benefits for free --> 1.) Free ETF report revealing the 3 best ways to profit from ETFs right now, 2.) Free 9-lesson course showing you how to pick winning ETFs, 3.) Specific details on Nathan's favorite individual ETFs for today's market.

 





Google
 
Web StreetAuthority.com


About StreetAuthority    Email Newsletters    My Subscriptions    Manage My Account    Job Opportunities
Contact Us    Affiliates    Disclaimer    Help    Site Map

© Copyright 2001-2009 StreetAuthority, LLC  All Rights Reserved