I boxed DAL by shorting it. Put options might have made more sense, but I closed my E-Trade account and was left with Datek, which doesn't do options. I don't trust my "real-life" broker with options nor shorts, as she doesn't seem to understand how either work.
I have been in the habit of using the enhanced charts at cbs.marketwatch.com, as they have most of the indicators that I use on a regular basis.
My system is to print the charts off and then get out my ruler, my calculator and my colored pencils. I note how the stock behaved when earnings, news and major market events occurred. I put a generalized trend on the volume and see how the stock behaves under various volume "loads".
I put the most weight in OBV, RSI, Money Flow and MACD. I put a little less weight in Price Oscillator, Momentum, Accumulation/Distribution (BOP) and Stochastics. I put very little weight in Rate of Change, Williams %R and Linear Regression.
I put the various averages in a separate category and use them as gravity. The averages tend to pull the stock price towards them. Bolinger Bands and Envelope Channel act to keep the stock price within a predictable range. Linear Regression is useless.
I tend to run TA on the stocks in my long-term portfolio about once a month, although I have been really slack about that lately. I'm holding these stocks for 20 years or more, so I'm not really worried about "local events".
Marketwatch also has excellent tools for finding stocks that have surpassed certain watermarks or have experienced certain events.
I would say that my success rate on Technical Analysis is at least 75%, but I really haven't kept score. I don't trade anything that's marginal. That's not to say that I don't short stocks, but I don't buy nor sell without a pretty clear indication of what's to come.
I also listen to a few people on SI that are much more intelligent and informed than myself, especially when it comes to shorting stocks. The inestimable Mr. Pink doesn't seem to miss very often, and Auric Goldfinger, Pancho Villa and Bill Wexler aren't too shabby, either.
If one rigorously applies TA to potential trades, one should never get taken in by a pump and dump. |
