Wedges, triangles, and stuff: Chart patterns for breakouts Message Board

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Strategies & Market Trends : Wedges, triangles, and stuff: Chart patterns for breakouts

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To: Doug R who wrote (34)	5/29/1997 1:28:00 PM
From: Mike Kehler	of 257

Doug/Rainier, My last message was unclear, sorry for the confusion. What I had in mind was much more simplistic, just want to separate TA from FA. I guess we don't really need a rating system to accomplish this, but it would provide a way of benchmarking one buy/sell signal to another (and with separate measurement of technical and fundamental reasoning). I don't think a rating system is that useful when watching a pattern develop, but instead would be associated with a buy or sell signal. Further, by no means can it replace good intelligent discussions about the "signal" as both TA and FA require subjective judgement. We could use a simple 1-10 scale, with 1 being least attractive and 10 being most attractive, or perhaps someone has a better idea. For example, I'll try to re-evaluate the SPTR break-out (as if it had just occurred): SPTR has just broken out of an ascending triangle pattern. Price pattern is very clear, volume was picture perfect and "big picture" also confirms (i.e. there is something to reverse), so I would give the technical buy signal a rating of 8.5 (out of possible 10). Fundamentally I see the company as very attractive for the long term, but only somewhat attractive in the short term. Long term growth potential is huge, but historical P/E is 25 and debt ratio is a bit scarey (85%). I would give the SPTR buy an overall fundamental score of 6 (to break it down further, I would give it a 4 short term and an 8 long term). Just want to reiterate that the need I see is a way to assess and compare TA and FA information/signals. The rating scale may or may not be the best way to do this. Be interested to hear what you guys think. If you think the rating stinks I won't be offended, but I hope you agree on the separation bit. Mike

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