Surprising housing data and a rally in energy helped lift the broader market.

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Traders moved away from equities heading into the holiday weekend.

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Gone is the name system, where the trade employees or “chalkies” would write on boards to ask and point out bids. At the present time, traders can place orders through the internet, and agents generally put them unfailingly in contact with the electronic system. As a result, online trading has become increasingly popular, stimulated by the new trading tools.

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Traders shrug off disappointing economic data after China soothes concerns over Europe.

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WHAT’S HAPPENING NOW: Lehman estate sues J.P.Morgan as Citi comes under scrutiny.

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New home sales data and a brighter global forecast could not sustain early gains.

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The recent stock-market crash caught most traders by surprise. True enough, many fundamental analysts and economists have long-been warning about the market being overdue for a correction, but none of them could say exactly when it was going to happen. Well, all of the eggheads were outsmarted by a simple technical indicator — the PPO, or Percentage Price Oscillator.

PPO is a lot like MACD. In fact, the Absolute Price Oscillator (APO) is essentially MACD on a slightly different scale. But PPO takes things to another level and has certain advantages over MACD. So with that in mind, is MACD obsolete? Maybe. MACD didn’t do a lot to predict the market’s recent crash, while PPO did.

But what exactly is PPO and how do you use it? Read on and watch the video to find out.

In this episode, you’ll learn:

- All about Price Oscillators and the difference between APO/MACD and PPO (0:44)

- How APO and PPO are calculated (1:44)

- The advantages of using PPO instead of APO or MACD (1:46)

- How to use and interpret a PPO histogram (2:27)

The video also looks at how PPO predicted the crash of early May 2010, and shows you how to use PPO with stockcharts.com.

In conclusion, the recent stock market crash should give PPO some extra credibility, as the indicator clearly predicted the crash. PPO is a lot like MACD, but has certain advantages discussed in this video. And on top of everything else, it’s easy to use — just follow the steps in this video.

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

P.S. Next week we’ll look Hanging Men and Hammers — two single-day candlestick formations that accurately predict reversals. See you then!

Episode 50 – This Technical Indicator Predicted the Recent Market Crash

Download the slides for “This Technical Indicator Predicted the Recent Market Crash”

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The index recovered after standing down as many as 292 points.

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In Option trading there is an agreement between two parties which gives the right to buy or sell an underlying assets at a fixed price on or before a fixed date. In option trading the trader has no obligation to carry out the transaction. For example if a buyer finds that the value of the underlying asset is diminishing, he may simply choose not to exercise his right to buy the asset.

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Expert advice amid the market storm: Don’t panic.

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