This thread came about due to a request for more technical analysis info. Its to be hoped that even old dogs can learn new tricks. Certainly they can teach us puppies how to yap!
Enjoy.
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So? Whats a moving average and whats the difference between that and an EMA?
Logged in
Thanks for starting this thread, Alan. I will try to help on the simple things.
Thanks Alan
Merci Alan for starting this new thread.
moving average vs exponential moving average
http://www.investopedia.com/articles/trading/10/simple-exponential-moving-averages-compare.asp
Really have to second the pointer to those Investopedia articles (there’s a series) on moving averages (EMAs, SMAs, and other kinds). Best stuff you’re likely to find for getting a full picture in a short time,..
When I was writing my own functions for generating moving averages in a private analysis system I put together, I read a large quantity of stuff that’s out there on creating MAs, and Investopedia puts a lot of knowledge in an accessible compact place.
If you do want to roll your own for some strange reason (yeah, I admit it: I’m strange), or just want to know how EMAs work behind the scenes, here’s an interesting (non-investopedia) article.
Yeah…. but is an MA really of any significance in terms of me making money? Certainly it cn be drawn on a graph….so can my body temperature, and investopedia will tell you what an MA means. But is it just another line on my forehead. Why/is it useful?
Thanks Allan
log, Thanks Allan
Just checking in. Thanks Alan!
WTF is Fibonacci…..RSI…etc ? Yes I can get the answers from Investopidia….but will they definitely help me to make money?
Alan – When I’m deciding what stock to buy, I rely strongly on the trend-line pattern. Right now, a lot of stocks appear to be right at the edge of forming my favorite pattern.
This pattern forms when a trend-line has fallen down a long hill into a low valley, then starts to climb up the next hill. The problem is….the stocks are camped out in the valley, sound asleep in their tents I think. So I’m waiting for a few of them to start hiking up that next hill. Positive action will be my signal to buy.
The other pattern that I like is a steady up-trend. GILD had this sort of trend-line until the biotech sector faltered. Biotech’s recovery has not been very strong. It is like a patient after an illness, just not doing so well. And GILD is not recuperating to new vigor, either.
I would enjoy learning what you and others most rely on when choosing stocks. What do you check out first? Do you pay attention to candles?…Fionaccie bands? And what is RSI?
Thanks Margaret. I recently posted to the weight loss thread:
‘The golden rule offered by all the great investors is ‘Timing is everything’. Beni was originally recco’ed here at $0.68; it shot up to $2; now its $1.’
Has that movement changed the science one iota??? Of course not. Would you be worried about that $1 price if you had bought at 0.68? Nope!! Would you be bricking it if you bought at $2? Yep!!! So my advice to anyone with IBS is not to doubt/research the science (coz yourll never truly understand the minutia). Either accept that there are wiser minds here helping to guide you through that minefield, or, find something better to do with your time than reading 99 posts a day. Concentrate on improving your buy/sell timing skills so that you own Beni (or whatever) at $1, not $2.
So what are those skills? Margaret has kindly offered her thoughts on the matter (although I dont know where to find her trend line pattern). What methods do you other guys employ? Please teach me. I know I’m missing summat….(brain cells probably). Presently I mostly rely on gut feelings, and my guts are not feeling too good.
test, not getting email
On another thread, Clomu asked about the validity of technical analysis (candlesticks, specifically, I think). Alan, our CEO, asked me to copy it to this thread, so here it is. Maybe I’ll get a raise! :>)
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As so many people have asked about so many experts, “If he is so good, why ain’t he rich?”
My understanding about any school of technical analysis is that (a) It tries to give a pictorial indication of the overall sentiment about a stock ( or a sector or the market ) of all investors at the present moment; (b), At best, the various methods work only some percentage of the time, and (c) , No matter which system you use, it cannot predict if the next price, or series of prices, will be higher or lower than the latest price. I suppose if any “signal” works at least 60 % of the time, one learns to put at least a little faith in it, especially if the signal can be confirmed by another type of indicator.
Having said that, I daily chart the 20, 50, and 200 day moving averages (and sometimes the Williams Pitchfork) in Excel on all of the stocks I own, and most of the ones in which I am interested. So far, the number of stocks in which this information has been helpful to me has been very small. But I keep doing it in the hope that my investing judgment will get better.
Elsewhere, our CEO, Alan Harris, has mentioned the “Death Cross” and the “Golden Cross”, where the 50 day moving average falls below the 200 day moving average ( supposedly very bad news !! ) and vice versa ( supposedly very good news !! ). These are new ideas for me, and I’m going to be watching for them. I already have a problem with them, though, because the actual trend started 50 days before the cross-over point.
But what do I know? Please take anything I say about investing with a pound of salt and throw half of it over your left shoulder to keep the losses behind you. :>)
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Here’s an addendum to the original post:
I counted the various types of signals (moving average, Bollinger Bands, RSI, MACD, etc.) a few months ago. If I remember right, there are over 60 different signals. I think the two most important things about them are:
1. There is no one signal that works all of the time. Find one or more that work(s)s for you a high percentage of the time. I have yet to start actually using any, but when I do I will want one that works over 66 % of the time for me. That means that 33 % of the signals will be false, but the ratio of good to bad will be 2 to 1.
2. Do not rely on just one signal. Look for a confirmation from something else. The something else might be a technical signal that is based on an ENTIRELY DIFFERENT method of calculation, or it might be a news story, or it might be how the sector is doing and where the stock fits into that sector. Or it might be comments from several of your friends here at SGS. The more confirmations, the better.
By the way — I had never paid any attention to volume until Margaret clued us in on its importance I will start factoring it into my thinking.
Completely off topic: I have been suffering all sorts of spyware/malware recently and spent hours and hours trying to rid myself of the nuisance. I tried 3 anti spyware progs, to no avail. So I complained and they sent these FREE links. Suddenly they are all gone and my computer is running like the day bought it. The load/download speed is amazing, my fan is quiet and the machine is no longer overheating….OH JOY!!
Of course you must do your own DD before trying, but its worked for me. Hope it does for you too. Do EXACTLY what is says.
AH
http://malwaretips.com/blogs/domaiq-virus-removal/
http://malwaretips.com/blogs/pup-optional-amonetize-virus/
Looks OK Alan, but how do these guys get paid?
if youre not paying, why worry?
The point being: “Free” on the internet is a red flag to me. I hope your trust is justified and your computer stays “fixed”. Regards, and thanks for all you do.
Theres a pro version too…so pay if it makes you feel better.?
All I can tell you is that I used the free version, and it worked wonders. Your call…..no guarantees.
Alan, this seems like a strange post. It sounds like a spam message (as if your account was hacked and someone was using it to post spam).
On another recent post, Alan mentioned the American Bulls (AB for short) — http://www.americanbulls.com/. It provides free daily candlestick charts on almost all U.S. stocks and many foreign ones, and it has websites for stocks in other countries. In addition to the charts, it makes daily intra-day buy and sell recommendations based on its charts.
Alan had mentioned it a few months ago, and I spent hundreds of hours working with it.
A big positive for candlesticks is that the chart presents much more information than a simple line chart. A big negative is that one has to learn the various patterns that give a signal. There are 34 patterns, which were too many for me to learn, although only 4 or 5 are really meaningful AB explains the chart pattern for its signals, and gives its probability of success..
Remember that the signals are intra-day. I found that, to be successful using them one had to be in front of the computer when the buy signal was given and then again when the sell signal was given. Otherwise, the price moved too far away from the signal.
For me, the best use for the website is to use their chart as a confirmation of another type of signal. But another person might find it very useful.
Sorry, I’m behind a little. Spring is busy time.
Instead of trying to explain with text, videos work wonders. I follow Eric Muathe on SA and for free, this is great educational material. I may post random sources of info which I find helpful. Watch how Eric, Joseph Hentges, and others analyze charts;
https://www.youtube.com/watch?v=r-OC2i5pSFs
http://seekingalpha.com/author/eric-muathe
https://www.youtube.com/watch?v=z4TDQHuExy0&list=TLWH1bU2r8ZnvqGOdgud9y2GhFdWS_JI7k
http://seekingalpha.com/article/2188703-where-is-the-market-headed-now-leveraged-etfs-tell-the-story
Im truly sorry, but I think youre wrong. I (we all) are privy to a zillion internet videos/sites that can teach us. But life is too short to watch a zillion. What I want to know is that YOU invested n hours in watching/considering this stuff, and this is what you came away with. The alternative is for 336 of us to watch the same video. Then whats the purpose of this thread? We learn from each others experiences…we have 1000 eyes and ears. If we gain just one nugget from each members research, that saves us all reading that same zillion lessons.
I love you Allan! But no, I couldn’t explain in 10 hrs what Joseph Hentges shows us in 5 minutes.
Just to note; I am an info junkie. Source material makes ALL the difference, make or break ya. The info, obviously not reviewed, is some of the best I’ve found in yrs.
I’m not retired, so to blog for days is not an option. Don’t care to review? Your loss.
If I could only follow 2 people, Dr.K & Joseph Hentges.
“watch and learn”
https://www.youtube.com/watch?v=ClmucvckEt4&list=TLWH1bU2r8ZnvqGOdgud9y2GhFdWS_JI7k
Don’t get all Janet on me or I’ll whip out my Cannon and smack ya in da face wit it. lol
I still love ya Allan. Maybe you could review the info first, then critique it.
I dont have the knowledge to critique it (yet) thats why I was asking you to do it. But fair enough, if this isnt just some random cut and paste link, and you truly feel its worth our time to create a foundation, thats good enough for me. Ill read and thanks for the pointer.
I was a licensed broker back in the 80’s with a Series 3, 63, and 7 licenses. I hated the business because I had to think about my money first and your money next. I worked for “highly reputable ” firms who are still in business today and that’s where I first heard the phrase “lipstick on a pig” among other self serving rationalizations about why brokers win and customers lose.
I trade for myself only and do not give any advice. With that said, IMHO, the only method that works most of the time is one that combines a realistic understanding of your personal situation and an unshakeable commitment to risk management, diversification and asset allocation. (It upsets me when I read another gumshoe irregular worry about losses that may be larger than they can afford.) Since I am retired I subscribe to a 90/10 allocation, with 90% of my equity assets DRIPed in income producing investments in companies with solid fundamentals that I do not ever want to sell. The other 10% is for investments that are chosen for their future, not their present, and so the rules are different.
For investments like these I believe you have to mix equal parts fundamental and technical analysis with a huge dose of patience. DR.Kss has gone a long way in making my biotech DD relatively easy. (I was the guy who asked about CRISPR’s.)
For technical information I keep the following indicators on my chart pages at all times.
1) Candlestick charts with Bollinger bands and 50 day Exponential MA (I use 10 and 200 also)
2) Moving Average Convergence/Divergence (MACD)
3) Stochastics: (I find Slow more useful than Fast) as an Overbought/Oversold indicator. You can also use RSI but I don’t.
4) Volume
I am not a mathematician so I use all of these indicators (and a few others) as “visual aids” all the time when making buy/sell decisions.
Since I’ve gone on a lot longer than I meant to I will only add that, as far as buying, the one month chart is critical to me (remember be greedy/fearful), and when deciding to sell I look carefully at the one year . If you look at a one month chart of IBB and then the one or even three year charts and look at the stochastics I think you’ll “get the picture.” Note the bottoming formation with a one month (slow stochastic) low on 4/15 followed by a distinct uptrend that seems to be getting stronger even today. Now compare the chart to Gild. You should see the similarity and it becomes clearer when it is “obviously” the right “time” to buy. At least for the “short,” sometimes very short term. Hope this helps.
It helps a great deal ! Im always confused when people talk about ‘affordable losses’ coz its a moving target. Losing 10% when you’ve paid off the mortgage and kids, while still earning more than you spend…. I understand. But losing 10% when your outgoings are negative, and income has ceased is mad gambling. There is no general right %. In fact % doesn’t come into it. Disposable $ is the limit…..and even that hurts if you aint got any.
Would you be so good as to describe RSI or whatever. I know I can look it up on wiki. But somehow, it sits better when the description isn’t couched in terms that must ‘please’ and not ‘mislead’ anyone. Your experience of the plus’ and minus’ will likely be far more honest…human….and real.
Alan, thanks for the kind words.
Since I believe that so-called “rational” markets are an oxymoron, I see the market as being in a constant state of flux with a “real” price only a “belief” in some “unknown” future. Human emotion being what it is, the price waxes and wanes constantly from euphoria to despair and everything in between. Most of the technical trading world is targeted at calculating just this overbought/oversold relationship. RSI and stochastics both measure the level of that emotion in terms of a moving average of closing prices over variable time periods with the hope of mathematically capturing those extremes.
Wilder’s RSI is the more complicated, using averages of up and down days over a variable time period. Slow stochastics computes only the closing prices during a set time period. Both are scored on 1-100 basis; 1-20 is oversold and 80-100 overbought using stochastics and 1-30 and 70-100 respectively for RSI. I use stochastic charts for entry and exit points and look at RSI primarily for trend reversals.
But, of course, one indicator is not a “system” and is far from perfect by any means. To add a “level of confidence” I combine the stochastic chart with the Moving Average Convergence/Divergence which is a more sophisticated visualization of entry and exit points.
I imagine that your broker’s website lets you build your tech chart page. I have mine stacked with a red/green candlestick price chart with Bollinger bands and EMA on top. Under that the MACD chart and under that Volume chart. I wish I could show you a page right here but, if you can set up a visual similar to mine, and look at the current 9 month chart of EXC (which I own) you can see exactly how the two indicators converge. Between Sept. 2013 and Jan. 2014 there were 4 major oversold events with a score of 20 or less while the MACD stayed negative, never once crossing into a bull-market signal. All the rallies failed. On Jan 14, if you were a “player,” you could have taken a shot at the “double bottom” on the stochastic chart and done fine but if you waited one more week, until Jan. 21, you would have seen the MACD go positive and you could buy at a much higher “level of confidence.” The price has now risen up to a level that is now “overbought”, and, if you were a trader, might motivate you to sell.
Our job is to first pick the companies with the fundamentals to withstand the modern world of “what have you done for me lately” Wall Street and then have the courage to be “strong hands” and stay in the game. If we risk more than we can afford we become the “weak hand” and our staying power is damaged. If we stay patient and stay within our limits we should be able to enjoy our successes and learn from our failures. Missing an “opportunity” is not the same as losing your shirt. (This is a reminder to me as well.)
I wish us all good luck and I guess I should add that I am long BNIKF, RGDO, CTIX, GILD, and AKAO and I have a very high level of confidence in the future.
capndave040, Thank You Very much for your thoughts and Ideas. Love your picks too!
I do not have any money to buy Gild Or AKAO! Wanted too! Good luck to you!
Capndave,
Thanks for the post. I also use MFI, money flow index, which mimics the MACD.
Thorough analysis;
http://en.wikipedia.org/wiki/Technical_analysis
Great Place to share valuable info.
Thanks Alan and everyone who is contributing.
Alan,
I think I’ve found a set videos that may get your attention. Zecco Zirens teach fundamental analysis. Enjoy;
https://www.youtube.com/watch?v=K_7JrmF90ek
Alan, I am confused by your persona on this thread, as on other threads you seem to be rather well-versed in technical analysis. I remember you saying somewhere that clearly RGDO was a sell when it crossed below its 30 day sma, and it would not become a buy again until it crossed back up. Maybe I’m going crazy and this was someone else. Or maybe you are just “playing dumb” on here to help facilitate teaching by others. Idk.