The stock market has been bouncing around in the past two days with a more than 600 point fall in the Dow on Monday and then a rebound of more than 400 points the following day.
James DeFranco, organizer of the Long Island Stock Traders Meetup Group, explained using technical analysis including Fibonacci where the market is headed and how local traders should possibly react to it during the group's meeting at the on Tuesday night.
"The rebound is because of the [Federal Reserve] coming out with the promise not to raise interest rates; in fact they're going to keep it down to zero percent," DeFranco said. "That really, really made the market bounce off."
While DeFranco notes that he can't say with absolute certainty where the market is going, and he added, "If anybody says they [know where the market is headed], they're liars," he uses technical analysis to gauge the market and determine what to buy and sell when and where his stop losses should be. One of DeFranco's forms of technical analysis is Fibonacci, which is is based on geometric patterns, he explained.
"The idea is to try to determine or predict where the stock is going to bounce off," DeFranco said. "My philosophy is buy stocks, only buy stocks, that are above the 200 and 50-day moving averages."
DeFranco, a retired pharmacist, started the LI Stock Traders Meetup Group about seven years ago in a Starbucks initially with six people. He felt a void after retiring and needed to find a way to help people again; now DeFranco gives stock advice free of charge to group members in an attempt to continue to help people.
"We try to give people a basic knowledge of what to look for," DeFranco said of the group.
Besides getting tips about the stock market, the group also got a lesson in foreign exchange trading from Michael Weissman, president of Beam Financial Group.