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SharpeiDiem Charting & All of the Above RSS Feed

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               Sharpei Diem!...You, too can learn to determine price direction without having  to struggle through numerous online studies. 
                                                                                                                      Earn...and learn while you do!                            

 
Diminish the risk, loss and frustration of making money in the markets.  This site is designed to break down the confusion and add to the understanding in the briefest time possible.

'Keep It Simple Stupid' in the Complicated World of Stock Trading and Investment.

Thinking about where to best get in or out of your targeted stock?  When you doubt where to put in a 'buy' order, go for the lower price even if means waiting -and you are chomping at the bit .  Fibonacci numbers are most helpful as are technical indicators: moving averages,  long term as well as short term chart assessments, Elliott Wave, rsi, macd, slow stochastics, adx/dmi, Donchian Channels, etc.  in conjunction with Fundamentals to include the latest Q's, paying particular care to net assets.

(When considering small caps, I tend to pay particular attention to and avoid those that show reserves out of balance when compared to future requirements to operate, low floats, possible bk or 'lawsuits' mentioned on message boards and heavy finger-pointing at management found on message boards. (This last can be unreliable if there is an unusually high complement of postings of questionable or malicious intent.)

Balance becomes very important, especially in the smaller companies and finding good investments in the smaller ones is highly volatile, highly risky and are not easily recommended.
 

Keeping It Real: 

There is only one purpose for this site; to perpetuate a smooth learning curve in the process of de-mystifying the analysis of stock charts and pricing.  Post requests as you are accustomed to doing on any IHUB site.  Let's keep an orderly and respectful board.  Any unruly behavior will be deleted immediately.

You will receive your reply with your chart and a detailed explanation of why and how the indicators played out from Sharpei.

Author's Sources:

There are several good online sites with concise explanations and images of chart formations Bulkowski's ( thepatternsite.com) has the most detailed and in depth tutorials that you will find. He is excellent but be prepared as sometimes 'in depth' can indeed be 'too deep'.  (He's my favorite, though.)  , candles: (Stockcharts.com); Fibonacci: (fibonicci.com), Elliott Wave Principle:  (Wikipedia). 
The learning curve can be exhausting, frustrating and slow (Five years is not an unusually long period of time to spend on learning enough technical analysis to prevent disaster; and large quantities of money can and is usually lost in the meantime.) which is why this site will attempt to short circuit  the infinite lengthy chaos the process requires.



 Why TA Works:
                                          
Mvd1683631            

Some believe technical analysis works, while others feel it's akin to reading tea leaves.

Judging by the feedback comments on this column, reader opinions are sharply divided too. The fundamental analysts who didn't see the fall in the oil price, or who told us that gold was going back to $1,500, or that the DOW would collapse didn't seem to attract as much trenchant criticism as those of us involved in technical analysis.

In 2014 we produced weekly CNBC blogs providing trading outlooks based on technical and chart analysis. We use chart analysis to establish the probability of trend change and to set price targets and objectives.

In 88 percent of analysis notes in 2014 the price targets were achieved or exceeded. That's around the same percentage of correct calls in 2013 and 2012. The analysis methods we use are not complex; they can be applied by anyone without the need for a Master's degree in finance. These methods are covered in my books, including Guppy Trading.

Charting analysis provides both the calculated price targets and the price levels that indicate the trade has failed. In 12 percent of cases, the analysis is not correct, but chart analysis provides exact price levels that signal this decision in real time.

Our best calls for 2014 included the January 2013 DOW target of 17,000, NASDAQ at 4600 and S&P at 2000. They also included oil at $88, and then later $68 and $58. The next downside support target for NYMEX oil is $48.

Gold support near $1,180 and the Shanghai Index upside targets above 3000 were also other correct analysis calls.

Our worst call was the NIFTY where we expected the parabolic trend to develop into a 50 percent or greater retracement. There was a correction, but it was not a major change in the trend. Two bullish calls on the Australian dollar were also incorrect, with the market failing to break through resistance levels.

Chart analysis is designed to identify situations where high probability outcomes are expected. Often chart analysis can be used to set exact price targets. The CNBC notes apply the same analysis methods we use in our personal trading and we use them because they work.

Daryl Guppy
Contributor
This site is not intended to be a full course of study as there would be no time to process members' charts and questions, but there will be an attempt to encapsulate the oft-asked critical issues with TA as they apply to most of you.  For more in depth study I have noted above under 'Author's Sources' and highlighted text quality sites that can be accessed online.  (If you have a particular question regarding the action of an indicator or related to this process, just post it and I will answer to the best of my ability.  Thanks for your patience with the limitations of this site.

Using Technical Indicators
The following is a short cut to finding an entry point but if you use most or all these 'tests' before jumping in, you should have some protection from overpaying a stock.
(It is imperative that you use these in conjunction with the following time charts:  Weekly one year, two year, five year, twenty (not all  necessarily but use about three); AND. also do the same
with the daily _ and even take a look at a couple of monthly charts (one to twenty years depending on how long its been listed, of course); then the final critical data to cement your
decision should come from very short term - from six months daily to 60, 30, 10, 05 mins (in multiple time frames - two to 20 days, for example). 

Moving Averages:
50 DMA... Does this support a current price or are you looking forward to resistance at this MA?  Same with 200 DMA.  It's a happy chart that shows an upward cross over the
200 DMA by the 50.  Use these in conjunction with the other Tech Indicators. 

 
 

Key technical indicators signaling a time to buy are: 1) RSI, a drop below 30 is considered in most cases a 'buy' sign; 2) MACD, the MACD (black line) will cross above its signal line; as it does it signals a place to buy;
3) Bollinger Bands, a close below the lower band is a good 'buy' signal; 4) ADX (black line)/DMI, a drop below 10 could be an excellent place to buy, but don't be in too big a hurry as it can take awhile for the price to catch up to this indicators. When the ADX moves in tandem with +DMI, the two are indicating the trend; 5) Slow Stochastics, a drop below 20 is a good example of a price reversal; 6) Volume, as it drops below recent norms at its lowest will signal a low in price and a change in price direction.

 

I find it helpful to use as many indicators as possible as there will be conflicting signals in the mix and therefore use the preponderance of weight to come to a decision.

 

Below you see an example of a 'V' -shaped bottom, another good indicator of a turnaround.

 

 

 



***Notice:  I would like to welcome aboard one other chartist, Conix from the IHUB family of contributors.  He, too will be adding his expertise in this area to those who wish help in
their investment choices and approaches.


Rules of Investing 1-10 are
Keep It Simple Stupid X 10.









 
 





 
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