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Strategies & Market Trends : Analysis Class for Beginners

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To: Arthur Tang who wrote (1136)	3/26/2000 5:54:00 AM
From: Arthur Tang	Read Replies (3) of 1471

Simple lesson on technical analysis. stockpoint.com If you go to the above site, go to interactive charts. Look at chart and select volume. You will see the price chart with volume underneath it. The volume is marked in green and red. Green volume is investors bought; red is investors sold. The chart can be used for intraday analysis. Investor bought and sold can be indicative of the market for your stock during the day. One word of caution, green and red is not accurate. Because the trades are by the minute and there could be many trades in the same volume bar by time compression. Then go back to yearly chart, try all the indicators, one by one. Look at the price chart. Can you relate each indicator to the price chart and predict what happened for the next change in the twists and turns of the chart. Even moving average among all others are not necessarily useful in your stock chart analysis. Technicians generally try to sell all the indicators as important to avoid being accused of inaccurate price predictions. Then you find out that Stockpoint did not provide a trend line analysis. It is easy for you just to connect the highest two points from the right side of the chart to the left, which is the line of resistance. And then connect the lowest two points with a line also. Trend lines tilting down to the right is a downtrend; stock price is going to pull back. You can predict how low it will go in time until it may intercept the line below, which is the support line. This tells you when to buy at the lowest price. But you must check to see if it is 30% below the nearest high. The opposite tilt of the trend lines tell you when to sell on a nice move, meaning stock price went up to resistance, so you can take profit; but watch out for income tax penalty on your gain. When the trend line went below the recent price then there is a breakout. The stock may stay in a trading range or will start to have a nice move. It may be an entry point, either for quick trading between resistance and support or a long term investment anticipating nice moves. If the recent price went below the line of support, there is breakdown. Which means the stock will be pulled back. Pull back is always 30% at first, then 70% or 90% down. Exit is recommended unless your cost is way down and the company has always been profitable.

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