RE: Stock house Tech analysis
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SUBJECT: RE: vli (ot) Posted By: oldpro
Post Time: 10/8/99 11:45
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Yes and No. hehehe. (How's that for an answer!)
First of all, I'm much more into charts than I am into indicators. I think the charts (good ol' price and VOLUME) can tell one many things. Also, I like the basic indicators. Keep it simple.
I think charts and t/a are most useful in a market that is as "free-flowing" as possible - which means the liquid seniors. Due to the manipulation factor with the juniors, I find the use of t/a is limited. Juniors are "news" oriented, and highly unpredictable from day to day. The truth is, these little stocks can be made to do anything at anytime by the insiders.
But that doesn't mean t/a has no benefit with the juniors. Au contraire. I never buy a stock without looking at it's chart - and a few indicators - mainly for confirmations.
I think t/a on the juniors is much better at showing you tops (when to sell), than predicting breakouts (when to buy). Even simple RSI divergences work very well for showing tops. (I use M/As (long-term only), Bollinger Bands, MACD, RSI, DMI, and a few others.)
But calling breakouts is much more difficult. You're better off knowing the story and knowing the promotion's timing (event-oriented), than waiting for the signal. You don't normally see the typical patterns for breakouts. They shoot up fast and hard, usually without warning, have a few big days, and then that's usually it!!! If you bought every penny that went up a little bit off it's bottom, or looked like it was about to run, you'd go broke very quickly.
I run a series of queries (that I wrote myself)each night on all the data. Pretty simple stuff, but I look for things like unusual volumes, etc. Anything out of the ordinary I will take a closer look at. The I go through a process of looking at general analysis first, and then if it looks good, I zoom in on smaller details. For example, many times it's just a one-day positive reaction to a news release - which I'll stay away from, because they usually come down a day or two later.
BTW: I agree it's a great way of taking emotion out of the trade. The essential ingredient is to have a SYSTEM (any sytem), which will force you to be disciplined. 100%. For many, that system is T/A based. For others, it's based on all sorts of different things. (Fundamentals, etc.)
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