Presentation on theme: "Beyond Price and Volume Using Technical Analysis to Improve Trading Performance with CANSLIM by Daryl Montgomery Organizer, New York Investing Meetup Copyright."— Presentation transcript:
Beyond Price and Volume Using Technical Analysis to Improve Trading Performance with CANSLIM by Daryl Montgomery Organizer, New York Investing Meetup Copyright 2007 – All Rights Reserved
History of CANSLIM Originated circa 1960 Charts were done by hand, computers werent available Technical Analysis consisted of Price/Chart Pattern analysis CANSLIM 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 didnt exist.
What Could Make CANSLIM Better? Finding Breakouts with Higher Probability of Success 1. Stocks with only 1 or 2 bases 2. Can Use Technical Indicators Buying at the Bottom of the Base 1. Can Use Price/Chart Patterns 2. Can Use Technical Indicators Better Determination of Market Rallies/Declines
Price/Chart Patterns Thomas 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
TECHNICAL INDICATORS John Murphy The Visual Investor Oscillators or Trend-Following Indicators Oscillators 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.
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.