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Advanced charting last meeting

Advanced charting last meeting. Only invest when: Share passes our filters on REFS Dominant trend in market is up Dominant trend in share is up Share shows short term buying signal Always use stop loss [7.5%] and ‘time controlled selling signals’ Use centred moving averages.

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Advanced charting last meeting

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  1. Advanced charting last meeting • Only invest when: • Share passes our filters on REFS • Dominant trend in market is up • Dominant trend in share is up • Share shows short term buying signal • Always use stop loss [7.5%] and ‘time controlled selling signals’ • Use centred moving averages

  2. Googled author • Much in demand in UK and USA • Sells data and programmes via his own company • Last [expensive] book in ‘99

  3. 80:20 rule • Sectors in year when Index -16%

  4. 80:20 rule • Sectors in year when Index +1%

  5. 80:20 rule • Sectors in year when Index +25%

  6. 80:20 rule • Shares in year when Index +25% • Shares behave similarly when Index is flat or decreasing • “Most of the time, 80% of shares will follow the direction of the market while 20% will do the opposite” - don’t try to buck the market!

  7. How to determine dominant trend in market? • Use 41 week centred, moving average of FTSE 100

  8. Centred is more accurate

  9. But centred MA stops short • Extrapolate by eye to NOW • ‘Price analysis’ extrapolation • Average MA itself • Try a shorter span MA near NOW [NAS] • If share’s dominant trend has been up for >6 months, look for share with younger trend

  10. Dominanttrend changing? • Calculate % of 120 shares with rising41 week MAs; <60% is signal for caution • Lot of work or buyauthor’s data andsoftware

  11. Buy signals • Trough in 5 week MA - more accurate than 10 day MA cutting up through 50 day MA

  12. Channelanalysis • Best technique of all • Must use centred MA • Drawing by eye is fine

  13. Quick profits • Channel shows dominant trend is up • Half channel bounce gives 17% in 4 weeks • Full channel bounce gives 22% in 7 weeks

  14. Extrapolate channel to NOW • Easy and accurate to do by eye • If difficult, don’t invest! • Use weekly prices until price approaches lower boundary when daily prices are better • Lots of examples show good gains and when not to invest • No losses as market buoyant

  15. Example of CA - buying • Select growth share using Zulu and REFS • Channel is rising so extrapolate by eye and wait until price arrives at lower boundary • Buy when trough formed

  16. Example of CA - selling • Peak on upper boundary • Stop loss already triggered • Sell for 41% gain in less than 4 months

  17. Conclusions • Plot FTSE 100 and its 40 week MA using website • Centre MA by moving it left 20 weeks using tracing paper • Draw in channels to NOW; get excited if trend is up! • Draw channel for selected share and extrapolate • Buy/sell when price at a boundary • Refer to these slides on our website • I’m willing to help!

  18. Reasons for failure • Trying to pre-empt market • Buying on price fall[a trend continues until it ends!] • Misplaced patience • Holding on for dividends • Listening to advice • Not spreading the risk [8-12 shares] • CAPITAL MUST BE PRESERVED

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