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Strategies & Market Trends : Strictly Buy and Sell Set Ups -- Ignore unavailable to you. Want to Upgrade?

To: Libbyt who wrote (8815)	4/1/2006 6:42:59 AM
From: chowder	Respond to of 13449

>>> IMO the end of the quarter must be one of the most difficult periods of time to try to trade strictly based on technical charts <<< That would depend on what it is you want the TA to tell you. If you want the TA to forecast price movement ... that's difficult. If you want TA to tell where you can buy at bottom dollar and sell at dollar top, that's nearly impossible. If you want TA to show you where price may reverse, that's somewhat easier, but still unreliable. If you want TA to show you buy and sell points, well that's not so difficult. What is difficult is abiding by them once in the trade. TA shows you where to cut your losses short and a lot of people can't admit a mistake and continue to hold. Most people want to buy a pull back. Many of them can't tell if a pull back is a correction or the beginning of a major move down. Since my strategy is to buy a stock with upside price momentum, let's look at a chart of CHS to see where those buy points are. When you look at the accompanying chart, the aqua color shows 4 buy points for CHS in the past year. The purple color shows 2 secondary buy points. The red shows 3 sell points. stockcharts.com[h,a]wahlyiay[d20050401,20060401][p][vc60][J73327257,Y]&listNum=1 I bought CHS on the 4th buy point in February. I then sold when the first sell point was breached. I took a loss on that position. Price has rebounded from the swing low in February, but I want to see CHS trade above the second secondary buy point which is noted in March. If price breaks below the top sell point, I see major support around $35. That's where 2 buy points meet and that price point should see some buying come to market. So, what TA is telling me isn't where price is going to go, TA is telling me where to buy and where to sell, cutting my losses and waiting for another low risk, high probability entry. I know you are motivated by a company's fundamentals. So let me share a thought. I don't look up the fundamentals of a company because I believe anything already known, is priced into the stock. Some may disagree and that's OK. I'm just sharing my belief. Just because I don't use FA doesn't mean I don't trade FA. Most of the stocks in the long term portfolio, I'm willing to bet, have great fundamentals. I just don't know what they are, and don't need to know. Price action tells me that when I see a weekly chart with a rising 20 week moving average above a rising 40 week moving average with a comfortable distance between the two, and with price trading near a 52 week high ... the company has good fundamentals. How to trade fundamentals? I read an article in Investor's Business Daily this past week about that. If you've ever read the Market Wizard books, most of the Wizards were trained under William O'Neil of IBD or use a variation of his system. These are the people on record for having the highest performing results at the time the books were written. Here's what IBD said last week. The fundamentals are what gets a stock in a watch list. He doesn't say blindly buy good fundamentals. He says the fundamentals just get you into a watch list. Once in a watch list, the technicals take over for the buy and sell strategy, hence the name of this thread. He said regardless of fundamentals, buy and sell off the technicals. Buy when price is breaking out of a base. Sell when price trades below a price support range, and always sell if a position drops 6% to 12% below your entry, regardless of fundamentals. Since you follow CHS so closely, you may not have to abide by the above strategy. I shared it so others can see if it fits their style of trading. dabum