|
June 17, 2008
“The Charts Don't Lie ”
We haven’t quite reached the beginning of summer but man, it sure feels like it. And I’m not even talking about the heat! The doldrums that affect the market this time of year have come early—from the weakening dollar to ever-increasing gas and food prices to housing and manufacturing sector slumps.
The bad news keeps rolling in, but here at Trending123 we remain hopeful. Why? Because—and I’ve said this before—we listen to the market and allow it to dictate our actions.
Instead of recapping today’s events and how they’re affecting our positions, I want to revisit a fundamental concept of our investment strategy that I can’t seem to emphasize enough: The Charts Don’t Lie.
Mark Twain said, “History doesn't repeat itself, but it does rhyme.” There’s a lot of validity in that statement, especially with regard to Wall Street. Like history, the market is dynamic, constantly changing and adapting to circumstances.
If you study the market’s fluidity long enough, you recognize current events that resemble events from the past. Let’s call these reference points. If you connect the distances between them, a pattern unfolds that guides investors to the next point, and so forth. At Trending 123 we rely on these past patterns that resemble current trends to project a stock’s future profits and get in on the ground floor. It’s this method that has generated us these returns:
Western Refining, Inc. (WNR)—45.90% in 5 weeks
Rackable Systems, Inc. (RACK)—59.27% in 16 weeks
Sohu.com (SOHU)—91.08% in 16 weeks!
Technical Analysis helps us distinguish between what is real and what we think is real. Hence my catch phrase: The charts never lie.
The only thing that’s real is where a stock closes at the end of the day. The driving force in our decision-making is that closing price. We use it as a point of reference within the context of a greater pattern, which ultimately determines how we play the market. When we identify the trends of past market leaders, we can look for similar movement in stocks in the market today.
But how do we recognize these patterns? Just as you can’t take one day or even one year as a representation of an entire nation’s history, you can’t analyze the market without context. To find meaning in isolated occurrences in history—or in isolated closing prices on Wall Street—we must connect a number of events to comprehend the greater picture.
Each pattern that we identify here at Trending 123 typically forms a geometrical shape, and you can check many of them out in my free online chart patterns guide. After identifying the pattern, we then see what typically results from the shape, because trends have degrees of failure and success. All that’s left is to decide what patterns are most likely to give us profits and play our hand!
It may seem more like number crunching than investing, but click on any investment service and you’ll see loads of statistics and numbers designed to guide investors. This is just another method—and one that’s based on fact and past market trends, not whatever stat is the flavor of the week on Wall Street. Remember that the object of this game as always is to identify the highest-probability chart patterns and milk them for all they're worth.
That’s why I said at the beginning of this piece that we at Trending123 are hopeful. We get the charts; we see the patterns. And they don’t lie, whether the market on the whole is up or down. Once you understand our methods, the profits will start rolling in. It’s not as hard as it sounds—Join us today.
Sincerely,
John Lansing
Trending123
|
