Greg Harmon, certified market technician, founder and president of Dragonfly Capital, and partner and CIO of Presidium Capital Management recently appeared on Benzinga's PreMarket Prep where he went over his process for following market trends.
The trend is the overriding major market; is what's most important to me. So the top-down part is that: looking for the major trends and then looking to identify stocks that are moving with the trends70 percent or more stocks move with the trend. So that if you get the wind at your back, that's an added bonus for you, said Harmon.
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For example, Harmon is charting the ETF CORN (NYSE:CORN). Corn has been putting in a nice rounded bottom and bouncing back out at the top side, he said, noting to play the stock over the options because it's more liquid and to protect the downside with options when it gets to a level over 36.
Harmon also commented on gold (NYSE:GLD) futures, a market that everyone is watching.
From a longterm perspective it's in a downtrend off from that 1900 area, but it's just been moving sideways now in a very broad range, between 1200 and 1400. After, what, nine months now? said Harmon.
According to Harmon, most are looking for more shorter term plays than monthly trades on gold. He also went over his views on Momentum investing.
I think for those MoMo names, if you're not watching them closely, you stand to get burned very badly on the reversal, said Harmon.
For Facebook (NASDAQ:FB), he noted that the daily charts had a nice trend from July to March, but is now on a downtrend following some acquisitions. Harmon thinks it's worth a shot again when above 63.
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