Match the Chart to Your Trading Style
Stockscores.com Perspectives for the week ending November 11, 2013
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| Upcoming Events |
Calgary and Vancouver Events
How to Find and Profit from Hot Stocks
Calgary-Vancouver-Surrey
November 12 - 16
Click here for details
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In this week's issue:
Stockscores Market Minutes Video
Long term traders can get swayed by the short term gyrations of their stocks and short term traders can pay too much attention to big picture issues. This week's Market Minutes video discusses how to match your chart analysis to your trading time horizon. Plus, Tyler provides his weekly market analysis. Watch the video on Youtube by clicking here.
How to Find and Profit from Hot Stocks
Those in the Calgary and Vancouver area should attend our stock trader workshops this week.
These 90 minute presentations will be mini Stockscores trading classes. Just as I do when I teach the Investor and Active Trader courses, I will start with the Foundation segment, teaching attendees how to analyze stock charts and understand risk management and the reward for risk ratio.
I will then go over three trading strategies. One very long term strategy for the completely passive stock investor that has yielded dramatically better results over the past 15 years than a simple buy and hold approach.
I will also show a swing trading strategy that takes about an hour a day and a day trading strategy that traders can apply all day on any day they wish to trade the market.
With the sponsorship of Disnat, these presentations are free to attend. Join us by registering using the links below:
Calgary November 12th and 13th
Vancouver November 14th
Surrey November 16th
Online Webinar - to be announced soon
Analyzing the Right Chart Time Frame
Stock chart analysis is becoming more and more popular every day; investors are realizing that the chart is a graphical representation of what thousands of investors believe about a stock and is often more reliable than the opinion of just one person's fundamental analysis.
The problem is that there is a lot of incorrect chart analysis happening and one of the most common mistakes I see is the use of the wrong chart for making a decision.
Do you look at monthly, weekly, daily, hourly or even minute by minute charts when doing chart analysis? The answer should be motivated by the type of investor you are.
A long term trader, someone trying to maximize the return of their long term retirement portfolio should not get too caught up in the day to day gyrations of the market. It is the big picture trend of the market that should matter the most, making the gain or loss for the stock or the overall market on a single day quite irrelevant to the trading decision.
On the other end of the time frame spectrum are the day traders who should really be concerned with what is happening on the 2 minute, 5 minute or 15 minute charts. For the short term trader, these time frames are the most relevant and yet the decisions of many short term active traders are swayed by the headlines they read about big macro economic issues that could affect the long term direction of the market. The level of debt that the US Government has does not have a lot of relevance to what a hot bio tech stock is going to do over the next day.
On Stockscores.com, it is possible to set the default time from of the charts you look at to suit your trading time horizon. If you are a long term trader, set the default to a three year weekly chart. Medium term? Focus on the daily chart. A swing trader can set his or her default time frame to the 15 minute time frame.
Doing this is relatively simple.
First, pull up the chart for any stock by entering the symbol in the upper right corner of the site. Remember that Canadian symbols need a prefix, T. for the TSX and V. for the Venture.
Go to the charting tab, this is either beside the small chart view or below the large chart view.
Make sure that the chart type is set to Quick.
Set the interval to the time frame that suits you.
Set the lookback period. I like to look back as far as possible without having the resolution of the chart degraded.
Click on Create Chart
This has now established a new chart default which will remain as your default each time you log in using that computer. If you use a different device, you will have to reset the chart settings on that machine as well.
While it is important to focus on the time frame that suits your style the best, it is also wise to look at other time frames for confirmation. A person focused on the daily chart should check the weekly and the hourly for confirmation. A day trader may be focused on the two minute but a quick check of the 15 minute and daily will be helpful as well.
You can do that using the fast time frame links that you will see at the top of the chart. Click on one of these to change the time frame quickly without changing your default chart.
You can see a visual example of how I do this in this week's Market Minutes video.
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The market continues to be very good for trading. This week, I applied a longer term view to finding trading opportunities by setting up the Stockscores Market Scan as follows:
Either All Canadian or All American
Sentiment Stockscore > 55
Gain/Loss > 5% over the past 10 days
Today's Price is 97% of the 80 day high
Number of Trades > 250 for Canada, 1000 for American
When I inspected the charts, I set my default time frame to a three year weekly. I want to see stocks breaking from predictive chart patterns that have been building over a number of months.
Here are a few that I like:
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1. T.TIH
T.TIH is breaking out of an ascending triangle pattern that has been building since the middle of 2011. It pays a dividend historically yielding about 2% but has the potential to rise up to resistance at $33 from its present $25. Support at $23.
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2. LEE
LEE is another example of a break from an ascending triangle pattern but this stock is also breaking through to new highs going back to early 2011. Good potential to go to $4.50 with support at $3.
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3. T.VET
T.VET pays a nice 4.68% dividend and is breaking to new highs after trending sideways for the past three months. Support at $57.20.
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References
Get the Stockscore on any of over 20,000 North American stocks.
Background on the theories used by Stockscores.
Strategies that can help you find new opportunities.
Scan the market using extensive filter criteria.
Build a portfolio of stocks and view a slide show of their charts.
See which sectors are leading the market, and their components.
Disclaimer
This is not an investment advisory, and should not be used to make
investment decisions. Information in Stockscores Perspectives is often
opinionated and should be considered for information purposes only. No
stock exchange anywhere has approved or disapproved of the information
contained herein. There is no express or implied solicitation to buy or
sell securities. The writers and editors of Perspectives may have positions
in the stocks discussed above and may trade in the stocks mentioned. Don't
consider buying or selling any stock without conducting your own due diligence.
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