The way most people invest, it’s a fool’s game.
They buy on a hunch or a hot tip. Stocks get hammered, and the average guy sells at the bottom. Google looks like it’s going up forever, so otherwise-prudent people pile in at the very top.
Investing can make the cleverest people -- folks who are experts in their own fields -- look mighty dumb.
Greed and panic
For most investors, emotion trumps intelligence.
We bounce back and forth between greed and panic, depending on how the market is treating us that day.
And when it comes time to make an important decision, we have as much self-control as a couple of seventeen-year-olds on prom night.
You’re human. I’m human, too. But I hold one huge advantage over most investors.
I learned many years ago that I’m an emotional creature. We all are. It’s what makes us smile at little children at play. It’s what makes us want to pet a puppy.
It’s a wonderful attribute that helps make us human. But that same attribute makes us lousy investors if we let it have its way.
That’s why I only trust the Science of Investing using technical analysis.
Tuesday, May 19, 2009
Thursday, April 30, 2009
Double top or M top
Double top or M top is a chart pattern formed after an uptrend or a rally.The profitable action to take is to sell when price breaks below the neck line.
After selling, the objective is to buy back when the price dropped as much as the amount from double top to the neck line.
If you are interested in trading forex click here for help.
Double Bottom or W bottom
A double bottom is one of the most recognizable chart patterns. It typically resembles a "W" and forms after a downtrend. A double bottom forms as part of a consolidation process, in which one group of traders is liquidating a position as another group is accumulating. Typically, the left side of the W is formed as part of a larger downtrend. Once that low is set, the stock bounces higher before coming back to retest the first low. If the retest is successful, the chart begins to look like a "W". Once the "W" is formed, the stock must clear the neckline, which is typically in line with the center peak of the "W". It is important to note that a double bottom is not valid until the price closes above the neckline.
The entry point to buy is at the time price breaks the neck line.
Trading in stocks, options or forex is only profitable if you do it right and get enough help. You may click here for help
Thursday, April 23, 2009
New Bull at Bursamalaysia?
The stock market is starting to show the symptoms of a typical bull market. Firstly, investors were not
afraid at all as the KLCI approached the 76.6 pts RSI yesterday, which helped the benchmark index to
stretch its gains within the overbought territory. Another very positive development is that this time, it
was the broader market which fueled buying sentiment on the KLCI component stocks instead,
eventually sending the key index higher by 10.06 pts.
We have said that it is not impossible for the key index to stretch the current uptrend. Although
the market has entered overbought territory, the KLCI could still rally further and carry the daily
RSI over the 80 pt-mark. We have seen this happen many times before in a typical bull market in
the past, especially when the weekly and monthly RSIs are far from being overbought.
Of course, the key technical indicator to watch out today is the daily RSI, which is now trading at the 79
pt-level. No doubt that the market is becoming more and more overbought, but the conviction and
confidence of buyers are also improving by the day since the breakout from the 100-day MAV line. This
type of market sentiment is essential at this stage to carry the KLCI further away from the 200-day MAV
line. Yesterday’s rally is the initial confirmation of a decisive violation of the 200-day MAV line.
Meanwhile, the near-term technical outlook of the KLCI remains firmly bullish. We are still eyeing
a strong support at the 200-day MAV line, which is now situated at the 959 pt-level. An additional
support is seen at the 936 pt-level, followed by the 925 pt-level. To the upside, continue to look for the
1,000 pt-level as the next formidable resistance
afraid at all as the KLCI approached the 76.6 pts RSI yesterday, which helped the benchmark index to
stretch its gains within the overbought territory. Another very positive development is that this time, it
was the broader market which fueled buying sentiment on the KLCI component stocks instead,
eventually sending the key index higher by 10.06 pts.
We have said that it is not impossible for the key index to stretch the current uptrend. Although
the market has entered overbought territory, the KLCI could still rally further and carry the daily
RSI over the 80 pt-mark. We have seen this happen many times before in a typical bull market in
the past, especially when the weekly and monthly RSIs are far from being overbought.
Of course, the key technical indicator to watch out today is the daily RSI, which is now trading at the 79
pt-level. No doubt that the market is becoming more and more overbought, but the conviction and
confidence of buyers are also improving by the day since the breakout from the 100-day MAV line. This
type of market sentiment is essential at this stage to carry the KLCI further away from the 200-day MAV
line. Yesterday’s rally is the initial confirmation of a decisive violation of the 200-day MAV line.
Meanwhile, the near-term technical outlook of the KLCI remains firmly bullish. We are still eyeing
a strong support at the 200-day MAV line, which is now situated at the 959 pt-level. An additional
support is seen at the 936 pt-level, followed by the 925 pt-level. To the upside, continue to look for the
1,000 pt-level as the next formidable resistance
Sunday, April 19, 2009
Blind men story and market analysts
This is just a story to justify why we need technical analysis to guide us in the information overloaded world of share investment.
It goes like this:-
There is a group of five blind men all having the first encounter with an elephant. The first man touched the elephant trunk and thought that the elephant is like a snake. The second man touched the elephant's tail and thought that the elephant is just a jungle vine. The third man encountered the elephant's leg and thought that the elephant is a tree. The fourth raised his hand and touched the elephant's ear and thought that elephant is a huge fan. The fifth man grabbed the elephant's tusk and thought that the elephant is a huge polished rod. When they sat down together for lunch, they started to relate their encounter with an elephant. On learning that they had all encountered but a single elephant, they were puzzled how each of them could have such a different impression of the same animal just like market analysts disagreeing with each others even all are analysing the same stock at the same point of time.
Because market analysts are very much like the blind men analysing the elephant , they only see the part they are trained to see. As such, every analyst suffers from narrow field of vision and misses the forest after examining his tree. One will look at earnings and, finding rapid earnings growth, forecast that the stock will go up. Second analyst, found that the same stock is over-valued due to the low book value and that same stock will go down. The first analyst placed great emphasis on growth of earning and the second analyst is looking for stocks trading at big discount to book value. Perhaps another pair of analysts comes along. One like a stock that is traded at high dividend yield and recommended a buy while the other saw that this same stock is not retaining enough profit for future expansion so recommend a sell. And yet another analyst comes a long and reject all the opinions on the stock because he was worried of the high gearing of that stock.
From a pure technical analyst point of view looking at fundamental of the stock is a futile exercise as they may be opposing views on the same stock. So he believes that all factors are reflected in the chart of the stock. By looking at the trend, pattern formation and oscillators etc he hopes to see the forest and not just a tree. And from that wide view he plans to catch all the monkey (money) in the forest.
This justifies the use of technical analysis.
However, Warren Buffett is the guru in investment and if you wish to be like him click here.
Have a good day!
It goes like this:-
There is a group of five blind men all having the first encounter with an elephant. The first man touched the elephant trunk and thought that the elephant is like a snake. The second man touched the elephant's tail and thought that the elephant is just a jungle vine. The third man encountered the elephant's leg and thought that the elephant is a tree. The fourth raised his hand and touched the elephant's ear and thought that elephant is a huge fan. The fifth man grabbed the elephant's tusk and thought that the elephant is a huge polished rod. When they sat down together for lunch, they started to relate their encounter with an elephant. On learning that they had all encountered but a single elephant, they were puzzled how each of them could have such a different impression of the same animal just like market analysts disagreeing with each others even all are analysing the same stock at the same point of time.
Because market analysts are very much like the blind men analysing the elephant , they only see the part they are trained to see. As such, every analyst suffers from narrow field of vision and misses the forest after examining his tree. One will look at earnings and, finding rapid earnings growth, forecast that the stock will go up. Second analyst, found that the same stock is over-valued due to the low book value and that same stock will go down. The first analyst placed great emphasis on growth of earning and the second analyst is looking for stocks trading at big discount to book value. Perhaps another pair of analysts comes along. One like a stock that is traded at high dividend yield and recommended a buy while the other saw that this same stock is not retaining enough profit for future expansion so recommend a sell. And yet another analyst comes a long and reject all the opinions on the stock because he was worried of the high gearing of that stock.
From a pure technical analyst point of view looking at fundamental of the stock is a futile exercise as they may be opposing views on the same stock. So he believes that all factors are reflected in the chart of the stock. By looking at the trend, pattern formation and oscillators etc he hopes to see the forest and not just a tree. And from that wide view he plans to catch all the monkey (money) in the forest.
This justifies the use of technical analysis.
However, Warren Buffett is the guru in investment and if you wish to be like him click here.
Have a good day!
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