Presentation on theme: "Advanced charting last meeting Only invest when: –Share passes our filters on REFS –Dominant trend in market is up –Dominant trend in share is up –Share."— Presentation transcript:
Advanced charting last meeting Only invest when: –Share passes our filters on REFS –Dominant trend in market is up –Dominant trend in share is up –Share shows short term buying signal Always use stop loss [7.5%] and ‘time controlled selling signals’ Use centred moving averages
Googled author Much in demand in UK and USA Sells data and programmes via his own company Last [expensive] book in ‘99
80:20 rule Shares in year when Index +25% Shares behave similarly when Index is flat or decreasing “Most of the time, 80% of shares will follow the direction of the market while 20% will do the opposite” - don’t try to buck the market!
How to determine dominant trend in market? Use 41 week centred, moving average of FTSE 100
But centred MA stops short Extrapolate by eye to NOW ‘Price analysis’ extrapolation Average MA itself Try a shorter span MA near NOW [NAS] If share’s dominant trend has been up for >6 months, look for share with younger trend
Dominant trend changing? Calculate % of 120 shares with rising 41 week MAs; <60% is signal for caution Lot of work or buy author’s data and software
Buy signals Trough in 5 week MA - more accurate than 10 day MA cutting up through 50 day MA
Channel analysis Best technique of all Must use centred MA Drawing by eye is fine
Quick profits Channel shows dominant trend is up Half channel bounce gives 17% in 4 weeks Full channel bounce gives 22% in 7 weeks
Extrapolate channel to NOW Easy and accurate to do by eye If difficult, don’t invest! Use weekly prices until price approaches lower boundary when daily prices are better Lots of examples show good gains and when not to invest No losses as market buoyant
Example of CA - buying Select growth share using Zulu and REFS Channel is rising so extrapolate by eye and wait until price arrives at lower boundary Buy when trough formed
Example of CA - selling Peak on upper boundary Stop loss already triggered Sell for 41% gain in less than 4 months
Conclusions Plot FTSE 100 and its 40 week MA using website Centre MA by moving it left 20 weeks using tracing paper Draw in channels to NOW; get excited if trend is up! Draw channel for selected share and extrapolate Buy/sell when price at a boundary Refer to these slides on our website I’m willing to help!
Reasons for failure Trying to pre-empt market Buying on price fall[a trend continues until it ends!] Misplaced patience Holding on for dividends Listening to advice Not spreading the risk [8-12 shares] CAPITAL MUST BE PRESERVED