Presentation on theme: "Beyond Price and Volume"— Presentation transcript:
1 Beyond Price and Volume Using Technical Analysis to Improve Trading Performance with CANSLIMby Daryl Montgomery Organizer, New York Investing Meetup Copyright 2007 – All Rights Reserved
2 History of CANSLIM Originated circa 1960 Charts were done by hand, computers weren’t availableTechnical Analysis consisted of Price/Chart Pattern analysisCANSLIM incorporated some use of Price/Chart Patterns- Cup with Handle and Double Bottom, Support/Resistance and Moving Averages*Technical Indicators could not have been included because they didn’t exist.
3 What Could Make CANSLIM Better? Finding Breakouts with Higher Probability of Success 1. Stocks with only 1 or 2 bases 2. Can Use Technical IndicatorsBuying at the Bottom of the Base 1. Can Use Price/Chart Patterns 2. Can Use Technical IndicatorsBetter Determination of Market Rallies/Declines
4 Price/Chart PatternsThomas N. Bulkowski has performed extensive statistical research measuring success rates and average performance. 1. “Encyclopedia of Chart Patterns” 2. “Getting Started in Chart Patterns”Top Performing Bottoms 1. High, Tight Flag* 2. Pipe/Horn Bottom 3. Inverted and Ascending Scallops 4. Three Rising Valleys 5. Rounding Bottoms 6. Descending Triangles 7. Ascending Broadening Wedges 8. Eve and Eve Double Bottoms 9. Triple Bottom/Reverse Head and Shoulder
5 TECHNICAL INDICATORS John Murphy “The Visual Investor” Oscillators or Trend-Following IndicatorsOscillators 1. Indicate overbought/oversold conditions useful in sideways markets. 2. RSI (not RS), William %R, Stochastics are Oscillators. 3. Can be misused. O'Neill critical.Trend-Following Indicators 1. Moving Averages simplest form 2. MACD and DMI/ADX 3. Can be leading or coincident. Time frame important.
6 How to Use Technical Indicators Divergences are Key.Divergence means price is moving in one direction and indicator is moving in the opposite direction.Divergences Indicate a Change of Trend.There can be multiple divergences.The longer the time frame, the more important the divergence.