Rather than focus on posting pincher tickers or pincher picks over the time since I started this list, I've been engaged in doing some heavy lifting, including statistical analysis of the things I've been finding in my screens, looking for variables apparent in the charts, while also addressing the fundamentals and market position of the stocks whose charts I'm looking at. The effort is intended to try to find things that might correlate well with the variables in future price performance.
What I'm finding isn't a surprise, in that it appears there are a number of statistically relevant ties between future performance and prior features in chart patterns, as well as between performance and what DD shows in the relative market position and/or stock fundamentals behind the tickers.
What emerges can be boiled down to a couple of hugely overly simplistic things (perfect!!!)... in terms of chart features... which is exactly the sort of short hand that makes TA most useful... as recognizing patterns in charts saves a whole lot of time in doing fundamental analysis of stocks or painful analysis of details in individual stock charts, and also makes it more apparent, at a glance, what features you do need to look for in particular charts.
The patterns exist for reasons, and common patterns tend to share common reasons based in common market factors or similar fundamental factors. I don't find it useful to ignore that chart patterns DO relate to fundamental issues, and that the patterns apparent in investors behavior (which is what is made apparent in charts) tend to exist for reasons. Knowing what the reasons for the patterns are... makes your use of the "shorthand" you find in the charts... vastly more powerful.
Fundamental change... which may occur as a black swan... or a white one... still has enormous power to disrupt chart patterns. Charts cannot and do not predict the future. Charts demonstrate the fact of investors prior behavior, and prior behavior has strong correlation to future behavior that is statistically relevant... because some aspects of human behavior are fairly predictable, particularly including some known aspects of human behavior related to participation in markets... the desire to believe in ones choices, the madness of crowds, etc.
Charts help reveal behavior that otherwise might easily be... willingly ignored by those participating in it.
In what follows, I expect others have probably done this sort of thing before... so, if anyone knows of similar language being employed now, I'd appreciate mention of it here ???
Avoiding for now as much of the detail in the work in analysis that I've been doing... I'll start off on this new (for me) tangent by make a single, purposeful distinction between two chart types... adopting a shorthand in the language labeling them.
"Pincher" charts... the language I'll apply in description... are those in which the ADX and MACD form a no kidding pincher that looks exactly like a pair of ice tongs:
Ice Box Memories
Ice Tongs on EBay
So, a "classic" pincher chart... look at DHT on a three year weekly chart... and note the "pincher" began forming in April of 2011, completed its span in December, and has added the "points" of the tongs in January to complete the pictogram. The key feature that defines it is the SYMMETRY... that being a function of time, as the changes in ADX and MACD are synchronous... making a complete pattern that is almost like an hour glass if you look at both ends of it.
Useful, then, to look at DHT on a shorter time scale... as on an 8 month daily chart. There, you see DHT presents a vastly less symmetric picture, but now looks like it is a serial pincher, with three "pinches" in a row, each of which had a pinch and a "pop" at the inflection point where ADX reversed, with the first two pinches failing after the "pop".
So, a first obvious distinction can be made between "daily chart" pinchers and "weekly chart" pinchers... with the difference in performance out of the pinch apparent on the two charts clearly mattering a lot...
Other charts, that have a similar pattern in terms of the relationships between ADX and MACD, but that are NOT classic "pinch charts" because they don't form that pattern that looks like Ice Tongs ? They perform differently than "pinchers" because of those differences... which basically boils down to a difference apparent in the synchronization of events as that is reflected in the charts... a timing difference... with investors behaving differently over time... as other things influence their behavior over time... in the market, or in the fundamentals.
Given variance in the timing... chart features develop differently, and the patterns resemble things other than ice tongs... with subsequent differences in performance that match...
So, I'll call the first major difference you tend to see the one that depends on a rising ADX, but an MACD that isn't precisely mimicking the ADX in synch. Typical is a flat or rising MACD with a shallow slope, which, paired with the rising ADX, gives something other than a "pinch" that then turns into something more like a wine glass, flute, or a goblet... or, early on, one side of a flat champagne or martini glass.
Look at an 8 month daily chart of AGDY and you see what looks like an initial "pinch" chart forming... When the pinch breaks, you get a decline into a flat line in share price... a rising MACD, then, later, the formation of "half a pinch" with only the ADX participating. Now, look at that chart again on a two year weekly view... and all you see is the formation of a long stemmed martini glass... no pincher anywhere in sight
I don't want to ignore the pattern I see in the AGDY chart... but, I also don't want to buy it in November of 2009 and still be holding it now, waiting for it to "perform"...
If I'd found AGDY in November of 2009 on the daily charts, a look at the weekly chart would have told me..."not a pincher". I don't think that means you "dispose" of the AGDY chart, rather than recognize its features properly, name them properly. With the benefit of 20/20 hindsight, the weekly chart clearly was telling you that you'd have two years to do the DD to figure out what the story was at AGDY ?
FWIW, I have NOT done the DD on AGDY... and have no clue what the issues are there. Sure enough, though, the new "half of a pinch" that began being formed in Dec of 2011 ? That turns out to have been predictable on the charts, by noting the crossover of MACD and ADX on the daily chart, or the reversal in ADX on the weekly chart, the rising Williams %R preceding the ADX, the MACD approach to the zero line, and the second derivative bolly pinch in November on the weekly. Other "pinch like" charts that are not symmetric like "classic pinchers" and that don't look like the AGDY chart, will have other "tells" that will depend on their unique features.
So, following the AGDY chart with awareness of its features would have been tradable into a 3 bagger or more... prior to the initiation of 10 million shares in dumpage... and given situational awareness... from the features of the chart, or from doing the DD... awareness should have conditioned your expectations and enabled you to win the trade with a nice return by timing an exit properly, given the expectation you'd need to exit... and shouldn't be expecting to hold.
Turns out that the patterns in "non-pinch pinch charts" are useful, can be similarly predictable, and can be imminently trade-able... although with vastly different timing issues and vastly different trading considerations.
So, it will be useful to adopt a different language in discussing those with different patterns... as that language contains a shorthand for describing those differences that will probably prove to be useful.
"Pinch charts" means "ice tongs"...
Other charts... ? Using language that properly describes the pictograms they create... and figuring out what things associated with those pictograms will make for good trading choices.... should be worthwhile.
So, I'll be working on "language" that enables using a "shorthand"... to better describe trading opportunities... in a way that should work to enhance the profitability of trades while minimizing risks... through better awareness of what the opportunities and risks are. TIMING... is the key source of the differences... so, looking for triggers and conditioning choices based on them with a situational awareness born of observation and experience..
A couple of basic concepts should pop out, here... that you might miss without a mention..
The comparisons made, to be useful, depend on comparing the same things in different time periods... and noting the meaning in differences that are ONLY made apparent by that comparison in different time periods.
DHT = weekly pincher... also, three-peat serial daily pincher
AGDY = half a martini... failed daily pincher
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