ClusterGains

POB 339
6301 Highway 58
Harrison, TN 37341

ph: 423-344-3855

Charts

Charts tell us the general direction of the market.  They are most useful as a selling indicator because company insiders will know about bad news long before the general public.  This will create a downtrend in the price chart before you actually know what the news involves.  When a company's chart or the S&P 500 looks like the backside of a mountain going down, that is the time to sell.  Some people sell when the daily price drops below the 50 day moving average.

Buying stocks can also be done according to the charts if the price is on a flat bottom or it is just beginning to rise from the bottom.  The end of a bear market may be signaled when the S&P 500 daily price chart rises above the 200 day moving average.  Company and economic fundamentals should also be considered before buying stocks.  If the company is not growing, you should not buy it, and if the economy is doing poorly, the stock market will not rise.

Another useful chart tactic is to find oscillating stocks or ETFs with fairly dependable highs and lows.  The price charts of these stocks look like rough sine waves, and they often occur when the general stock market is trading sideways in a narrow range.  If you can get a range of action between 5% and 20%, you could enter buy and sell limit orders to achieve small percentage gains every few weeks.  Then, over a year's time, you could probably make 50% or more from the multiple small gains.

 

 

Copyright John Overton 2009. All rights reserved.

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POB 339
6301 Highway 58
Harrison, TN 37341

ph: 423-344-3855