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Stock Market Charts ( they are easier than you think) Michael Kahn, CMT February 2014.

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Presentation on theme: "Stock Market Charts ( they are easier than you think) Michael Kahn, CMT February 2014."— Presentation transcript:

1 Stock Market Charts ( they are easier than you think) Michael Kahn, CMT February 2014

2 Who am I? Chartered Market Technician (CMT) trained and certified in market analysis trained and certified in market analysis Columnist – Barron's Online Newsletter Editor – Quick Takes Pro Former charting software designer …and beaten up enough by the markets

3 What do I do? Help investors assess risk and reward. no crystal ball no tea leaves no chicken entrails

4 Agenda Just the basics Just the basics When the market is moving - trend When the market is moving - trend When the market is resting - pattern When the market is resting - pattern Other important stuff – volume, sentiment, time Other important stuff – volume, sentiment, time

5 Possible Goals Get the feel for the market (sentiment, momentum) Get the feel for the market (sentiment, momentum) What does the market say? What does the market say? Bullish? Bullish? Manic? Manic? Does the chart agree with the fundamentals? Does the chart agree with the fundamentals? Or at least not disagree? Or at least not disagree? Intangibles Intangibles The Fed The Fed Gurus Gurus Risk on Risk on

6 Possible Goals What part of the market is best? (relatives) What part of the market is best? (relatives) Size Size big or small big or small Sectors Sectors Defensive or aggressive? Defensive or aggressive? Traditional leaders or not? Traditional leaders or not? Bonds? Gold? Bonds? Gold? Maybe it is time to diversify asset classes Maybe it is time to diversify asset classes

7 Technical analysis is a windsock, not a crystal ball. - Carl Swenlin

8 People People tend to do similar things when faced with similar situations. People tend to do similar things when faced with similar situations. Peoples behavior is the basis for chart patterns. Peoples behavior is the basis for chart patterns. The chart is the chart is the chart. The chart is the chart is the chart. (no analyst guesses and govt revisions) (no analyst guesses and govt revisions)

9 What is Fundamental Analysis? A method of evaluating a security that entails attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors. -- from the CFA Institute website (and Investopedia)

10 What is Technical Analysis? A method of evaluating securities by analyzing statistics generated by market activity. -- from the Market Technicians Association website

11 What do they have in common? Neither one can handle conditions that cause the market to be restricted, manipulated and otherwise not free. Fraud Fraud Mergers Mergers Quantitative Easing Quantitative Easing

12 Save us Obi Ben Bernanke (sorry Janet) Dated humor

13 I will make you a chart you cannot refuse The Godfather of Technical Analysis How I cope

14 Price Rules! Price - The stuff you put in the bank Price - The stuff you put in the bank In price, there is knowledge. Alan Shaw, CMT, Chief Technical Analyst. Smith Barney, retired Ralph Acampora, CMT, Chief Technical Analyst, Prudential Securities, retired

15 Volume is next Volume – How much money is moving Volume – How much money is moving In volume, there is truth. Dennis Jarrett, Jarrett Research

16 Momentum Momentum – How fast it got there Momentum – How fast it got there Which speed is profitable and most sustainable?

17 Structure (Patterns) Structure – Trends and Patterns Structure – Trends and Patterns

18 Sentiment (Fear and Greed) Sentiment Sentiment I feel good! Whatever Shes gonna eat us! Tesla Oct 2013 Electronic Arts Jul 2012

19 We got game! Price Price Volume Volume Momentum Momentum Structure Structure Sentiment Sentiment

20 Looks like a cheaper place to buy How many times have you thought, My stock is on sale, lets buy!

21 Looks like a cheaper place to buy Same price, different trend……could the same be on tap for 2014?

22 The trend said it all It works in both directions.

23 What does the market have to say?

24 The trend said it all It works in long-term time frames at major turning points, too.

25 Does something look right here? The Big Picture a few years ago.

26 And today… Log scales

27 Leadership Changing? Barrons Online November

28 Leadership Changing again?

29 Leadership

30 Leadership

31 Its the end of the world as we know it. – R.E.M. Sentiment

32 Sentiment Are you the last to be invited to the party? Are you the last to be invited to the party? social media stocks last year? biotech now? social media stocks last year? biotech now? Is your hair stylist giving you tips? Is your hair stylist giving you tips? Are they ridiculing the bearish commentators? Are they ridiculing the bearish commentators? Gold is going to $800!!!!!! Gold is going to $800!!!!!! Or for early 2009, were doom and gloom forever? Or for early 2009, were doom and gloom forever?

33 Quiz Time Question - What does it mean when the neighborhood tavern has CNBC on the television and not ESPN? Question - What does it mean when the neighborhood tavern has CNBC on the television and not ESPN?

34 Quiz Time Question - What does it mean when the neighborhood tavern has CNBC on the television and not ESPN? Question - What does it mean when the neighborhood tavern has CNBC on the television and not ESPN? Answer - the market is not at a bottom Answer - the market is not at a bottom

35 Quiz Time Question - What does it mean when the banks are offering new interest only mortgages? Question - What does it mean when the banks are offering new interest only mortgages?

36 Quiz Time Question - What does it mean when the banks are offering new interest only mortgages? Question - What does it mean when the banks are offering new interest only mortgages? Answer – the real estate market is not at a bottom……(sound familiar?) Answer – the real estate market is not at a bottom……(sound familiar?)

37 Quiz Time Question - What does it mean when there are whole aisles in the supermarket dedicated to the Atkins diet? Question - What does it mean when there are whole aisles in the supermarket dedicated to the Atkins diet?

38 Quiz Time Question - What does it mean when there are whole aisles in the supermarket dedicated to the Atkins diet? Question - What does it mean when there are whole aisles in the supermarket dedicated to the Atkins diet? Answer – time to buy bread and cereal stocks Answer – time to buy bread and cereal stocks

39 Question - What does it mean when everyone is talking about the Great Depression and Financial Armageddon? Question - What does it mean when everyone is talking about the Great Depression and Financial Armageddon? Quiz Time

40 Question - What does it mean when everyone is talking about the Great Depression and Financial Armageddon? Question - What does it mean when everyone is talking about the Great Depression and Financial Armageddon? Answer – Its March 2009! Answer – Its March 2009! The AAII survey showed 70.27% bears on March 5. Unprecedented. And it was not the only one. The AAII survey showed 70.27% bears on March 5. Unprecedented. And it was not the only one.

41 Quiz Time Question – What does it mean when, after a five-year bull market, mutual fund company advertisements show regular people saying weve got to get back into the market? Question – What does it mean when, after a five-year bull market, mutual fund company advertisements show regular people saying weve got to get back into the market?

42 Quiz Time Question – What does it mean when, after a five-year bull market, mutual fund company advertisements show regular people saying weve got to get back into the market? Question – What does it mean when, after a five-year bull market, mutual fund company advertisements show regular people saying weve got to get back into the market? Somebody is about to get burned again. Somebody is about to get burned again.

43 Up is good, down is bad. Nice long-term base

44 What do you see?

45 How about this?

46 or this?

47 There was no need to lose it all.

48 real trading!

49 If you dont see anything, its not there.

50 Get it?

51 Up is good, down is bad.

52

53

54 The Real World Right Now

55 Double top, bear reversal

56 Up is good, Down is Bad

57 The real reason we do this: To make the buy, sell or hold decision. Not to predict the future

58 The Big Question Does market analysis work anymore? Yes! (mostly)

59 The Real World Right Now Profitable Trading. Written up on the breakout. Failed this week

60 The Real World Right Now Does Mikey like it?

61 The Real World Right Now Does Mikey like it?

62 The Real World Right Now Does Mikey like it?

63 The Real World Right Now Does Mikey like it?

64 The Real World Right Now

65 Mmmm, dividends

66 The Real World Right Now

67 End with some laughs An ode to Quantitative Easing

68 Ben Lightyear. QE to infinity and beyond!

69 Have another shot of Bernanke juice.

70 Ben Bernanke as a child

71 Quick Takes Prowww.QuickTakesPro.com Getting Technicalwww.Barrons.com Books: Beginners Guide to Charting Financial Markets Copies available right here Copies available right here Technical Analysis: Plain and Simple – 3 nd edition Real World Technical Analysis

72 Free Chart of the Day No obligation………No spam………. Sign up at the website Conference Special on full newsletter Sign up at the website $10 for the first month (regular price thereafter) No further obligation, cancel any time


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