Separating the Strong from the Weak Using Stock Charts

– Strength and weakness are
two common terms you’ll hear when it comes to charting. I’m gonna break them down in this video and tell you why you should
look at one over the other. (upbeat music) Hey everyone, lead trainer with StocksToTrade Tim Bohen here. Love doing these videos, they bring you guys all
of this information. Be sure to subscribe to get notified as soon as we post a new video. And also, hit that alert
bell to get notified as soon as we post a video. We do a lot of live videos. I want you to be there ASAP. So today I’m gonna talk about two terms you’ll hear a lot and
they’re kind of ambiguous, so that’s why I want to talk about them. So we’re gonna talk about
strong charts and weak charts. One of the actually, one of
the common misconceptions and I get asked about this a lot, is we look at daily charts,
weekly charts, monthly charts. And a lot of the times when
we’re talking about weak charts, people think we’re talking
about the weekly chart. Like the one day, the
seven day weekly chart. The one month weekly chart. The one year weekly chart. When we’re talking in
support and resistance land, strength and weakness, we’re
basically boiling it down to an up trending chart versus
a down trending chart. And the reason we focus on this is, if we’re long biased traders, if we’re looking to buy
stocks that are breaking out, that are pushing new highs late day, that may gap up, that may
look to be swing trades, that could continue for multiple days, we wanna see strength. I mean, that’s a green candle every day. That is higher high or higher lows and higher highs then for instance. So remember, know your candle sticks. We do a lot of videos
discussing candle sticks, but we’re looking for
strength, that higher low. So each opening candle is higher than the previous candle’s low, than that higher high. So the closing of the candle is above the previous closing candle. So that is what I would consider strength. Weakness is that lower
lows and lower highs, a down trending chart which
would be something more if you’re looking to short sell. If you’ve got a, especially
if it’s a big gainer the day before, day
two, that first red day, you look for a lot is a short seller. And that stock is making lower highs lower highs getting
ready to break support, that’s your short area. That’s your weak chart
that you want to slam into on the short side. Vice versa, that strong chart, that stock that ran big the previous day, maybe it gapped up day two, and then it’s putting in those
higher highs and higher lows into the market close and
gives you that gapper. So I think it’s a good thing to know these different patterns, this different terminology,
may seem basic, but these things can
commonly be misunderstood. If you’re long bias, focus
on those strong charts. If you’re short bias,
focus on the weak charts. And if vice versa, if you’re short bias, avoid shorting a up trending chart. You might get lucky sometimes,
you’re gonna get in trouble. Vice versa, if you’re a long bias trader, avoid trying to bottom feed. In momentum stock land,
a lot of these stocks never come back so avoid
those down trending charts. Now in summary, what is
your favorite chart pattern? You like to go long, strong charts, or do you like the short strong charts? A lot of guys do it and get mixed results. Or are you a dip buyer? Do you like to buy weak charts? So let me know, what’s your favorite? Comment below, strong or weak. And as always, be sure to subscribe and ring that bell so that
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7 thoughts on “Separating the Strong from the Weak Using Stock Charts”

  1. I've been trying to swing the bounce on the year time span when it's at the bottom of the range, I wait for a confirmation or two and set my stop at the last major low but it doesn't seem to be working out. Am I being dumb or is there a right way to play this?

  2. Tim, Thanks for what you do! I just started learning trading about 2 months ago. When I'm scanning in the morning using STT many of the big % gainers that are under $10 have weak long term charts (6-12 months). Some end up getting huge volume a good price action on the day (I am long biased for sure). I know nothing is absolute in the stock market. My question is: Is it fairly common for stocks that have a long term weak chart (Tim Sykes refers to these charts as 'crows' slowly being pecked to death.) to make several last gasps before completely dissolving?

  3. I've been long biased so far, out of necessity. When my account has sufficiently expanded, I'm looking forward to experimenting with the shorts.

  4. I want to get better at dip buying. A lot of the breakouts have been fakeouts (its always been a volume issue, but you don't know when its going to reverse on you), so I want to buy a strong long term chart with a weak intraday period.

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