Technical Analysis and Charting

Top 77. Mar 27, 1999 2:38 AM

» DanG_6 - Thanks to Mike & Karin

Thanks to Mike for the site on stock research. It never ceases to amaze me that no matter how much info you think you have, there is always more out there just for the asking. And thanks to Karin for the site on Technical Analysis. I hope Tony is "listening" because the on-line book on TA at the site Karin gave ("Technical Analysis from A to Z") is EXCELLENT and would be a great place for Tony to start if he's really interested in learning about it. It covers many facets of TA including stochastics, charts, A/D line, etc. And Tony, I wish I could say that stochastics works 83.9% of the time, and a H&S works 63.2% or whatever, but I can't. The academics will show you studies that "prove" they work 50% of the time, just like flipping a coin. But, as I think I said before, I use charts, stochastics, and moving averages to see if I'm getting into a stock that I like fundamentally on the "ground floor" or on the "penthouse", not as some infallible predictor of the future. Charts and moving averages can also be used to help place stops or to tell when the price trend may be changing. TA should be only one tool in your kit among many. And you can get along without it quite adequately by simply using an index or a well managed fund, or diversifying among 25 or more good fundamental stocks in various industries. Don't agonize over this stuff as if it were an exact science. It isn't, and shouldn't be approached as the be-all and end-all of investing in my opinion.
- Dan

-- posted by DanG_6

Top 78. Mar 27, 1999 6:40 AM

» TONYBRIG - T/A

I have a lite touch Dan when it comes to
this subject. Good to know but to use only
when one feels this is the link one needs to use
to complete the puzzle.
The H&S seems OK to me specially if the General
Market is BEARISH. Plus if more bad news on the
specific Co. and stock then it could be a short
play.
But to me charts are no good without STATS on them.
I like some of the "stuff" I learned concerning
STOCHASTICS.
Like the new high theory. When a stock hits a new high then comes down and then exceeds the new high again. This I like and use.
Also the higher highs and higher lows theory is
good.
What I want to see is a VOLUME to Price change
chart showing VOLUME as a key-note. What is
the correlation of VOLUME as momentum to Price
change. Seems like it could be a leading indicator!
BOLHH

-- posted by TONYBRIG

Top 79. Mar 27, 1999 9:34 AM

» JenL_3 - Dan - Good post above about the reliability and usefulness of TA

Dan - Good post above about the reliability and usefulness of TA. You say - "I wish I could say that stochastics works 83.9% of the time, and a H&S works 63.2% or whatever, but I can't. The academics will show you studies that "prove" they work 50% of the time, just like....

<img src=" http://www.geocities.com/WallStreet/Dist...">.....flipping a coin".

Thanks for putting it all into perspective...Jen

-- posted by JenL_3

Top 80. Mar 27, 1999 10:50 AM

» DanG_6 - Stochastics-More info but no stats

Tony,
Stochastics only "work" as long as the stock rallies from an oversold position. They merely show where a stock is in relation to it's recent trading history. If a stock goes from 50 to zero in a straight line, it's stochastic oscillator will be showing it as "oversold" even as it plows into the ground. Likewise, if a stock takes off like a shot, such as many of the internet stocks have done, stochastics are no help since they will be in the upper regions of their recent trading range constantly. The stochastic will show them as being "overbought" for months on end. But in a stock that has good fundamentals, but rallies and sags due to normal market forces, you can use it as a guide to get in on a dip rather than a bulge. You can usually tell whether a stochastic "works" for a particular stock by observing the oscillator versus the price movement for the past year or so. If the price moves up and down nearly in sync with the oscillator, then use it to time your buy as it gets into oversold territory (usually the 20% line). Many technicians will wait for the oscillator to first dip below the 20% line, then cross it on the upside before taking a position. This keeps them out of the "straight down to zero" stocks that never put up much of a rally as they dive. These technicians are willing to give up a little of the rally for a little assurance that they aren't buying into a permanent decline. Then to be doubly "insured", they place a stop at 5% or so beneath the recent low after they make their buy.
So that's what I know about stochastics. Read the on-line book for more info. If you want "stats", you will have to do your own research, but I think you'll find that the best "stats" will be seeing how the oscillator has interacted with the particular stock of interest in the past year of so of price data. For that I'd suggest checking out the following site which will plot stochastics for any stock if you set the proper options:
http://cbs.marketwatch.com/data/_charts/...
- Dan

-- posted by DanG_6

http://gaskinsco.com/gk-iporatings-frame...

Top 81. Mar 27, 1999 1:04 PM

» Karin - IPO SCORECARD

Rate your IPO:

-- posted by Karin

Top 82. Mar 27, 1999 9:56 PM

» DanG_6 - Animations

Jen, I'd sure like to know how you do those great animations. I love 'em!
- Dan

-- posted by DanG_6

Top 83. Mar 27, 1999 10:53 PM

» JenL_3 - Animations are Fun!

Thanks Dan - I am posting some lessons on how to transfer images from the internet on the "Tricks and Tips" thread:

here

It's really easy to do, and fun....Jen

-- posted by JenL_3

Top 84. Mar 28, 1999 9:17 AM

» TONYBRIG - I dont get it

Dan

I'm more confused then ever.
dont need anymore books.
But thanks I'll just go back to Oneill
Like a few indicators like new high dip then new high again!
Higher highs and higher lows!

They seem to work OK for me.
Now back to my high p/e stock picking theory.

Good stocks have high p/e's (not always)
Low p/e's are so for a reason (not always)

BOLHH

-- posted by TONYBRIG

Top 85. Mar 28, 1999 9:33 AM

» KirkL - Tulips

Tony, FFT, not "Fast Fourier Transform", but Food For thought....

Tulips had a very high multiple. Were they a good investment at their peak?

50 page summary of Tulips in this book Extraordinary Popular Delusions and the Madness of Crowds

Suggest going to the library or ordering the book and reading the chapter on "Tulip Mania" as well as "The South Sea Bubble".

I am NOT saying EMC, Yahoo, AOL, MSFT, ORCL, et. al. are the same as buying Tulips, but, especially as a gambler, you should really understand the past history and investor psychology that lead to huge bubbles and great investor loss of capital.

-- posted by KirkL