tech/a
No Ordinary Duck
- Joined
- 14 October 2004
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This thats it.
Price action?
All i know about a company usually is the 3 letter asx code. I don't care for fundamentals at all.
Stock rising on high volume - without knowing anything about a stock, you could have bought into BNB when the hedge funds were covering their shorts.
I agree stl_08.
Surely accelerated eps..sound cash flow statements etc are reason WHY INVESTORS/TRADERS (yes traders too) buy a company.
"Researching stocks takes a lot of time and it prevents me from doing other things."
I agree - researching stocks is time consuming.
But there's a simple solution to your problem.....don't do any research. There's no need to - tens of thousands of traders and investors have already done the research for you, and their findings are reflected in the trend of the stock.
AMP fell from $13 to $3 between March 2002 and August 2003. Shortly after it's downtrend began it was patently obvious, even to someone of little experience in chart reading, that the stock was heading south east on the chart.......a downtrend.
Why was it downtrending? Because traders and investors were quitting the stock en masse.
Why would they do that? Because tens of thousands of them had researched the company and found out that it was in trouble, and it's future prospects were none too bright.
In which case, you could have made money from the AMP downtrend by selling the stock short, or buying put options.
Or if you owned the stock, you could have bailed out long before it's value was decimated.
The point is that you could have got quite an accurate summary of the fundamentals of AMP without spending one minute of your time doing fundamental research. Just look at the chart.....all the information you needed was graphically displayed for you.
Look at the current price action of AMP. Nice uptrend in place, particularly when viewed on the weekly chart.
Why is it uptrending? Because tens of thousands of investors, having done their research, have formed the opinion that the stock has good fundamentals. No need for you to research AMP to profit from it - the research has already been done for you. If an uptrending stock shows temporary weakness by pulling back for a few days as profit takers bail out,
and then the uptrend resumes as buyers come back in, it presents you with an ideal opportunity to hitch a ride on the trend and make some money.
The same sort of simple analysis and trading strategy can be applied to any liquid stock that starts uptrending or downtrending strongly.
WPL is a good example.....uptrend began in early 2003. Three years later, the stock is more than four times it's 2003 value.
Once you saw WPL heading steadily north east on the chart, making higher peaks and higher troughs, did you really need to spend hours or days of your time doing fundamental research on it?
Thousands of investors had already researched it for you and their findings were very positive, otherwise why would they be piling into the stock and pushing it higher week after week?
A common fallacy among stock market players is that if you want to profit from the market, you have to read the financial papers, company reports, brokers newsletters etc to keep yourself up to date with the latest developments in the economy and within individual companies.
Its simply not correct.....I've been trading the markets for 10 years or so and for the last eight of those years I haven't read a financial publication, a brokers newsletter or a company report.
The most reliable information is in the charts. Learn how to interpret them, learn how to identify trends, learn how to recognise retracements, watch for the trend to resume following the retracement.
You won't need to spend your time doing boring company research, and you won't need to hand your hard earned money over to Fat Profits either.
If you want some good books on how to identify trends and how to hitch a ride on them, I'd suggest.....
"Dave Landry On Swing Trading" by Dave Landry
"Secrets For Profiting In Bull And Bear Markets" by Stan Weinstein
The trading methods expoused by both these men are simple to learn, easy to implement, and require very little time input from the trader or investor.
Would you buy something for a 66% discount?
How do you determine value?
we've got a classic EW feature in the stock with a beautiful third wave retracement and bottoming feature.
OK so now we have some cool technical features to work with, we've got a classic EW feature in the stock with a beautiful third wave retracement and bottoming feature.
With STRONG TECHNICAL features I sold, taking $2.05 in profit or close to 500% return.
Fundamentals were also strong, the value that pushed the shares to above 2.90 were still present so looked great having both fundy and techie reasons to jump in. And so I did at $0.85 cents.
Stock is PES, bottomed at 40c. around Oct.
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