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Stock Charting Idea


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The charts change over time. Different decades have different charts. So trading tactics based on charts also need to change from time to time.

We now have markets going down and recovering in major swings. We are not trending into new highs like the 90s. Its looking something like the 70s which had some major ups and downs. So why not look for a book was based on trading tactics that worked well in the 70s? That might be Stan Weinstein's "Secrets for Profiting in Bull and Bear Markets". Some of his methods would work in all markets but it is in these swinging markets that his ideas work best.

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Could be some merit in that. The problem for technical traders at the mo is that resistance points are being routinely smashed but there is little overall confidence in stocks. May be big profits for the brave. Maybe.

Myself, I like to keep a balanced portfolio with a long to match each short. My system works on the basis that if I have 10 good stocks as longs and 10 poor ones as shorts, in the end my account will rise. It works too.

My basis for choosing stocks is that I ask myself if the market likes the stock or not. How does it react to good and bad news? So I may go long on SRP for instance and short MONI. The market likes the former but has no faith in the latter.

This morning I bought BARC which fell on solid results and sold RBS which is less favoured by the market but was up on the day. BARC has recovered well and RBS has risen a bit, but not as much. In this way, I make money. Also, I'm protected from market moves, like 9/11 to a large extent.

It's how the pro's trade. Took me a while to work that out but all the info is out there.

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From Stan Weinstein's book:

Don't ever short a stock that is above its rising 30-week MA.

Don't sell short a stock because its PE is too high.

Don't sell short because the stock has run up too much.

Don't sell short a sucker stock that everyone else agrees must crash.

Don't sell short a stock that trades thinly.

Don't sell short a stock in a strong group.

Don't sell short without protecting yourself with a buy-stop order.

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