By Roberto PedoneWINDERMERE, Florida ( Stockpickr) -- Technical analysis can be a great asset to investors who want to determine what the trend of the market or a stock is before they throw down hard-earned money. Consulting the charts can help you spot important market action before it happens, preparing you to follow the trend and make the right trade. Technical analysis is a method of evaluating securities by relying on the assumption that market data, such as charts of price and volume, can help to predict future market moves and trends. Technical analysis will help guide you to discovering the chart patterns that offer the highest probability of success. By consulting the charts and using technical analysis, plus combining those methods with fundamental analysis, you will truly have an edge over a majority of market participants. There has been a lot of talk among the technical community of late that the market might be setting up for a major move down. Those concerns are definitely valid, but they don't guarantee by any measure that a big drop in the markets is imminent. In fact, as I write this the market is ripping pretty strongly to the upside. The Dow is up over 100 points and the S&P 500 is up around 1%, following comments from Federal Reserve Chairman Ben Bernanke. Market players should only anticipate a major down move in the markets if the S&P 500 breaks below the 1040 and the 1011 areas. Those are very key areas that the market must hold in order to avoid a major move down in stocks. Here's a look at some compelling charts that are piquing the interest of the Stockpickr community.
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Stockpickr member optionguy submitted Deckers Corporation ( DECK). This company is engaged in designing, producing, marketing and brand managing of footwear and accessories.
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Stockpickr member Michael Morse submitted Comcast ( CMCSA - Get Report), a provider of video, high-speed Internet and phone services, offering a variety of entertainment, information and communications services to residential and commercial customers.
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Stockpickr member kjp712 submitted Ruby Tuesday ( RT), which owns and operates Ruby Tuesday casual dining restaurants. Kjp712 has a short bias on this stock, and I can easily understand where that view is coming from.
Stockpickr member shawnmks submitted ProShares UltraShort S&P 500 ( SDS - Get Report). This ETF seeks daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the S&P 500 Index.Looking at the chart, you can see that the SDS found a lot of support from buyers in the past couple of months whenever it traded down towards $30 to $31 a share. However, because this is a mostly a day-trading vehicle, I am not so sure we can read too much into that action. The price support is merely areas in which the S&P 500 Index was hitting some resistance. My best advice when trading the SDS is to just use it as a day trading vehicle for whenever you're anticipating a down move in the markets. I wouldn't trust the charts very much, at least not when evaluating these types of highly leveraged ETFs for longer term trades. The support and resistance levels will work better on the SDS for day trading time frames. If you want to play this for a longer-term trade, I would only consider any chart readings that showed significant volume spikes above key prices levels. For instance, if you saw a lot of volume comes in as the SDS hit a new all-time high, or something to that nature.
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