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Leonel

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  1. Great question,Jeremy, Homebuilder ETFs are funds that track businesses that deal with construction supplies, house appliances, and furnishings. The first on the list is XHB. It attempts to match the S&P TMI index in performance before expenses are deducted. The fact that it follows an equal-weighted index means you also get exposed to large, medium, and low-cap stocks. Unlike conventional sector-specific investing, this fund provides traders with more strategic positions. ITB is also worth your time given it reviews the DJSHMB index that features American equities in the building sector. Approximately 90% of the fund’s assets go to the primary index’s securities and depository receipts. The remainder may be invested in swaps, options, and futures. Surviving the 2007-2009 economic crisis adds to the fund’s legitimacy. Needless to say, it has been strong ever since. Since they focus on a single industry, home ETFs are riskier than their alternatives in broad market indexes. This calls for long holding periods to make up for short-term value declines.
  2. Hello John, Thanks for asking. These corporate bonds provide high returns to make up for their high risks. Taking an individual’s credit score; those with weak positions incur hefty interests while their highly-rated counterparts enjoy lower charges. Such is the case for bonds where the issuing agency acts as the borrower and the bond trader the lender. Junk bonds are characterized by a BB ranking and below where AAA represents the best offerings. The good news is a junk bond’s status can be upgraded when business improves, hence, distinguishing them from other bonds. They’re also related to stocks only that they offer fixed interest payments. As such, bondholders are compensated before stockholders during bankruptcy. Although their term is ten years, you can call them after four or five years. Ordinarily, junk bonds are at their peak during a business cycle’s expansion stage. This is because a good economy reduces the possibility of underlying companies defaulting. On the downside, you lose all your capital when the business doesn’t pay. This calls for the analysis of every company’s credit risk.
  3. Hello Brian, This oscillator spots a security’s cyclical movements. Though the CCI swings past zero, the absence of a top and bottom limit emphasizes its function as a momentum indicator. Like RSI’s and slow stochastics, CCI’s have a 14-period default. Note that a short setting increases the sensitivity and total signals. This indicator compares an asset’s price change with its average price movement. By showing prices beyond the average, soaring positive figures indicate strength. Conversely, low negative figures indicate below-average prices, hence, representing weakness. The CCI not only acts as a coincident but also a leading signal. As a coincident metric, shifts past +100 mark a price action strong enough to spark an uptrend. Those under -100, on the other hand, anticipate a downtrend triggered by weak price action. As a leading signal, speculators track oversold and overbought positions likely to predict mean reversions. Again, bearish and bullish variations may uncover momentum changes and foretell trend reversals. While it’s mostly used for analyzing commodities, the CCI also applies to stocks.
  4. Thanks Curtis for the question. The VWAP locates a stock’s true average by considering the transaction volume at a particular price as opposed to its closing value. The fact that it’s an intraday signal explains why you won’t find it in weekly and daily charts. You should wait for the security to test the VWAP’s downside and find the stock closing over it. The goal is to buy above the candle high that closed over the VWAP. While it suits conservative traders, this approach bears risk given that you will be several percentage points from the low. This strategy also applies to pullback setups. Here, the investor tracks the security’s value as it nears the VWAP. In addition to the VWAP break, participants check the tape for a spike in order sizes and speeds. Considering the neutrality of this zone, avoid breakouts happening far from the VWAP. Likewise, stay away from range breakout trades if values gap up or down to prevent whipsaws.
  5. Hello Jane, A thrusting pattern features two candles presented as long lines. Comprising of a black body, the first candlestick occurs in a descent. Contrarily, the second bar is white. It starts under the prior base and ends over its close but underneath its midpoint. This sets it apart from in and on neck illustrations where both candles share a closing level. A thrusting pattern, therefore, shows bullish efforts to save a diving market. Buyers in the climb are anxious about the unsustainable uptrend. As such, sellers proceed with the descent the following day. Although it’s considered a downward continuation, this technique can also represent a bullish reversal. The direction of the price beyond the pattern isn’t definite making this strategy unreliable for treading breakouts. Seeing price can break anywhere, values above the first candle’s peak hint at a long position while those under the second bar’s bottom indicate a short position. A stop-loss order is also crucial for this method. For upper breakouts, you can set the stop order beneath the pattern’s low. On the contrary, the area over the pattern’s apex is ideal for stops involving downward breaks.
  6. Hi Sam, Thanks for coming here. A bearish belt hold presents two candlesticks, the first being bullish and the other bearish. The opening bar develops in an ascent while the second one gaps up and ends next to or at the former candle's close. Hence, this pattern suggests a trend will become bearish. So, what's the interpretation of these symbols? Arising from a bullish environment, a majority of participants are hopeful about the market. Consequently, buying pressure overpowers selling pressure, thus, sparking an uptrend. This is when the initial candlestick forms. The optimism spreads to the following trading session causing a positive gap. At this point, however, investors are anxious about a reversal. This activates the selling force, explaining the filled gap and the close near the first candle. A longer body means a stronger resistance. Observing bearish belt holds doesn't eliminate the risk of going short. Again, the same strategy doesn't apply to all markets. That's why back-testing is paramount. You could also use past days' data as a confirmation.
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