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Underexposed - Canadian Stock Journal

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  #201 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Just 3 stocks left to analyze....FP Newspapers [TSX:FP], Choral Aviation Inc [TSX:CHR.B] and Kelso Technologies Inc [TSX.KLS]

FP Newspapers [TSX:FP]

This is one of the "boat anchors" in the portfolio. If you recall, I set a limit Stop Loss at $4.10 back in mid June but removed this order with the positive drift to the share price.



the share price has certainly returned to a positive trend and there is no concern on my part that the share price will plunge at this point. The price has now performed normally after a run (positive or negative) .... that is that it tends to return to the 20daySMA.

NOW you look at the indicators below....both MACD and Slow Sto have a nice positive slope...the BBwidth has dropped another notch. I like the position of today's share price which is flirting with the upper Bollinger band (BB). This is not a breakout yet....the trigger for a breakout is the rapid positive slope to the BBwith...and that is flat at the moment.

That trigger is present both in bear and bull situations....and is usually lead by a decline in MACD/Slow Sto (bear) {see may 2-12) or increase in MACD/Slo Sto (bull) and here we find those indicators rising which is making this look decent for a bit of a bullish spike.



The Ichmoku looks fine...at least for a small bullish run. The thin red/blue lines by the price hint at a bullish cross. The OnBal Volume is decidedly neutral (at least the decline has stopped) and the CCI has a bullish look.

Why do I say the run will be a "small" bull run??? Well we are currently under red clouds and they present strong resistances...it will be a tough slog to get through the range of $4.40 - $4.50.

Conclusion

This is a HOLD for now With any kind of luck at all we will recover some of those losses.



Choral Aviation Inc [TSX:CHR.B]

This is a small aviation company with a fleet of small aircraft that they contract to Air Canada under JAZZ for regional flights as well as other airline services.



Very bullish chart...there is not a breakout at this point (the BBwidth is still tightening....but Slow Sto are very bullish, the MACD is neutral and the price is flirting with the upper BB...a major share price movement is only a few days away.



This is a totally bullish chart

Conclusion

This is a HOLD ...if I had extra money in this portfolio I would reserve it for this stock


Kelso Technologies Inc [TSX:KLS]


I have discussed this stock at length in a previous post and why it is a very good long term hold. To summarize, this is the only company that makes modifications to rail oil tankers to make them safer to transport oil by rail.



On the surface...looking at the portfolio spreadsheet this stock looked like a dog. In retrospect I suppose I could have sold at its peak in early May and consider the repurchase now. But I did not ...I don't think given the circumstances again that I would do any different. That decline was basically profit-taking IMHO and I liked the company for its products and future potential.

right now it has recovered and is in consolidation following its share price drop. The 50daySMA seems to be acting as a support right now and I like the position above the 20daySMA. It will be a week to 10 days before the break up or down will happen....the BBwidth is still getting tighter, the SlowSto while looking not bad is not very bullish as yet and the MACD looks to be topping out for now



you see the problem in the Ichimoku...the price is fighting its way through the molasses of the Green Cloud. You can see how the upper border of the cloud is a serious resistance. Yes, it will take a a week to 10days to clear this cloud as I said earlier. The CCI is failing now slightly and the OnBal Vol is neutral.


Conclusion

This is a HOLD also ...if I had extra money in this portfolio I would reserve it for this stock. If one or both of the oil companies that I have placed Limit stop-losses are sold I would add to this stock...I think this is just the beginning for this stock....not the end as they have hardly begun retrofitting old tankers with the safer valves as well as applying their technologies to newer tankers.


Well that is a complete look at the fantasy portfolio....for the most part I am happy with its performance.

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  #202 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Here is the status for the end of the month with the pending stop-loss orders.

I really don't think these stop losses will be tripped...the are just there for the worst case scenario....already the share prices are beginning to recover. Why don't I sell them??? No reason now as they are in recovery.

I like this suite of stocks but will make adjustments if I see something I like better.



Well tomorrow is July 1 so it is Canada Day here and the markets are closed in Canada.....see you Wednesday

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  #203 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

well we appear to be headed back to previous highs of 8% or so....today we are now back to 5%+ as of the close of today.



Overall I am happy with how the current suite of stocks are performing. Previous boat anchor stocks have begun a turnaround as I had hoped/predicted so all is well for now

However, I take a lesson from my old salesman days. It is said that 20% of your clients contribute 80% of your sales...but you would be pretty stupid if you did not look for another client or two with potential to enter this coveted 20% client club.

If you wait until a client no longer produces to start looking for a replacement, well your overall sales suffer in that gap

Similarly, I should be looking for stocks on the verge of a breakout NOW so that I will be ready either to have the problem of which current stock to abandon for a better one or simply to plug in an alternate if one seems to fall with no hope of redemption.

So as a heads up as to posts to come I will go slowly through my procedure for identifying potential long term plays. I will say that the procedure is very different from looking for daytrading plays. For long term plays you are looking for solid stocks in an acceptable price range, perhaps you look for a particular sector..or evaluate sectors to find a good performer, once you narrow down your initial cut to say 15-20 possibles...then you look at fundamentals...then you look at relative performance and finally TA to establish whether or not a breakout is pending and the risk/potential of making an investment now.

It is not a short procedure at all...done right it takes a few days...I intend to walk through the steps I take and arrive at new potentials.

this is opposed daytrading where you are looking for liquidity, volatility, news "BUZZ" and almost no consideration of share price or fundamentals at all...however, the winning daytraders I have been associated with in other forums had at least a firm grasp of basic TA.

It is always instructive to me as when I write it on something like this it causes me to think more about what I am doing...and it generates new ideas....

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  #204 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Actually I am going through a new screening procedure for me. I have tried most screeners on the internet but none have been perfect for me as I have criteria that most Canadian screeners don't consider.

IF I was looking for American stocks I would use Finviz.com...no contest there...it is the best free scanner on the internet for American stocks...but sadly it does not include Canadian stocks unless they are also listed on American exchanges and that cannot include stocks on OTCB,Pink and Grey markets which makes this tool not very useful for Canadian stocks.

Free Stock Screener

Most other web screeners for Canadian stocks do not allow creativity...they are limited in the criteria they use and I have been unhappy with their results.

I use TDWaterhouse as my discount broker and it is curious that I never considered using their screening services. They have many preset screeners but I would like to do it my way...and sure enough you can.

I am not particularly endorsing TDWaterhouse...it just happens to be my brokerage company...I am sure that other Canadian banking discount brokerage services as well as other Canadian discount services offer similar screeners. I encourage you to investigate your broker for their services.

Search Criteria

1. Exchange

In Canada, of course, we have 2 major stock exchanges - The Toronto Stock Exchange [TSX] and the Toronto Venture Stock Exchange [TSXV]. The TSX of course is the major exchange and here you will find your non-commodity bases companies...at least you will not find the lesser commodity based stocks...the start-up companies in the mining/O&G sectors generally start here and "graduate" to the TSX when they achieve a certain level of maturity.

The TSXV is usually considered to be riskier compared to the TSX but since I like start-up mining and O&G companies. If you can find the good over the bad and ugly...you can find stocks of companies who have great capital growth and later can be the object of takeovers. If you are looking for mature dividend paying companies, you won't find them on this exchange.

So I like all companies from both the TSX and TSXV for consideration.

2. Share Price

At first blush, Share price might not seem important...in fact most would shun the $1 to $5 price range by calling them penny stocks. I don't agree with that for Canadian stocks...with US stocks I tend to agree with that sentiment though. There are many financially viable mining and O&G stocks that are past development stage and earning good coin now....debts are disappearing and these are excellent candidates for capital growth.

I shake my head at some American IPO for mining and O&G stocks that start at $20+ per share when they are little more than moose pasture leases but they successfully paint wonderful pictures of future wealth...and Americans buy into these dreams...we seem to be more conservative (I am certainly that way) when it comes to these type of stocks...you gotta show me the money before I think of putting money of my own into them...I have been burned severely by purchasing dreams in the past

There are opportunities at all levels of share pricing. but often you are limited by your free cash as to what you can buy.

I like buying a lot of shares .... let us say I have only $20,000 of free cash to spend

Lets compare sample of stock from our existing portfolio and how much they gained from Jan 1 - June 30

@$50/share : 400 shares......... TDBank [TD]................ 49.80 - 55.00 = 5.80 x 400 = $2080.00
@$20/share : 1000 shares....... Bonavista Res [BNP] .. 13.40 - 16.20 = 2.80 x 1000 = $2800.00
@$10/share : 2000 shares....... Bellatrix Ltd. [BXE] ...... 7.70 - 9.50 = 1.80 x 2000 = $3600.00
@$5/share : 4000 shares...... Choral Aviation [CHR/B].. 3.85 - 4.19 = 0.35 x 4000 = $1400.00
@$1/share.. : 20000 shares.... Lakeshore Gold [LSG] .... 0.54 - 0.98 = 0.44 x 20000 = $8800.00

now this is not exact as we are looking at stocks in a range of the share values so the real numbers of shares would be different hence the totals would be different...also this is a cherry picked group.....by and large fundamentally sound companies (after all I picked them )

but the trends are there....

the higher the price...the gains tend to be smaller [sure we can latch onto the tail of a TELSA and rocket to the moon (100% gain in a year) on a stock that has never netted a nickle in the last 3 years but that is a swing trade prospect...not a long term hold IMHO)

the lower the share price the less the risk....I don't mean on the individual stock...I mean diversification. You only have $20,000 to spend.....you can go all-in on 400 shares of one company @ $50/share...or... buy 2000 share of 2 companies @ $5/share ... or ... buy 4000 shares of 5 companies @ $1/share.....or some combination thereof

to my way of thinking a bare minimum number of share one should buy should be 1000....the reason being is that you really are not making any money if you have less....now at $50/share most cannot buy 1000 shares and have a diversified portfolio in my real port folio I have a couple in that range but those were bought from the proceeds of a nice gain from the sale of a stock...and that happens less than I would like

My major hunting ground is in the $1 - $5 range for a capital growth stock where I would buy 1000 - 5000 shares. If I was looking for a good dividend/capital gain stock I would be looking in the $5 - $20 range for 1000 -2000 shares. If I were looking for a solid dividend paying stock I would look at $20+ stocks but I would still want to buy at least 500 shares but I don't go there much lately.

*************************************************************
Seems I got more to talk about on Criteria but it will have to be in another post.

These are my own personal feelings of a long term trader who has been doing this as sole income for 10 years. {shrug} if you don't particularly agree with these observations...that is fine since it works for me and I am not about to change.

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  #205 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Too continue and bear in mind....these search criteria apply to a long term trade possibility search....looking for short term swings and day trade flips require a different criteria.

#3 Daily trade volume

This is less of an issue for long term traders as it is not necessary to get in or out of a trade in a heart beat. As long as you can buy the stock at the price you want and sell it for your price eventually...it does not matter if it takes an hour or a day to sell...it is all the same.

You do want activity on your stock though otherwise it is not going to move forward smoothly...erratic trading does not chart well so it is not easy to make decisions based on TA.

My criteria is that the stock trades at least 20,000 shares per day on a 90 day average....preferably 100,000 shares but for the right stock I would accept down to 20,000.

#4 Debt to Equity ratio

for most companies debt is a fact of life...but I do not wish to have a long term investment in a company saddled with prohibitive debt...so the range I am going to use for the ratio 0 to 0.2 as my range here....this upper limit is arbitrary but seems right to me.

Having no debt for an commodity company such as in the O&G or mining sector IF there is revenue to back it up. I actually like a little debt in O&G and mining start-ups ... it indicates that there is activity...a lot of exploration companies have no debt and no revenue....I avoid this combination like the plague....they are selling dreams only.

#5 Return on Equity (ttm)

my long term investments must be in companies that turn a profit...I use the "ttm" (trailing 12 months) as at least this has some basis in fact. I don't want to base my analysis on future earnings which frankly are just best "guesses" by analysts that are unknown.

the range of values I chose was over 1%

#6 Price to Earning ratio (ttm)

My range is 5 to 30...this gives me a nice range of companies without including exceptional expectations by investors and at least have a pulse

So there are my criteria and I will do a search and see what shakes out.....later

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  #206 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well, short week that it was (Canada exchanges open today...were closed on Tuesday) it was quite satisfying in that it was almost a 2% gain for the week



highlights for the week are the rise of FP Newspapers from $4.24 last week to $4.43 or almost 5% in 4 days and still rising. Bellatrix Exploration is reviving as well rising from $9.09 last week to $9.64 or about 6% in the same time period.

it was only a couple of weeks ago they were boat anchors...well the anchors are weighing...still a way to go but a couple more weeks like this and we are back to the profitable side...of the two though I think I will be selling FP Newspaper at the first significant decline...I would be doing this with a trailing stop-loss as I am currently using...I will probably raise the value on Monday.

the surprise today was the sale of Bonavista [BNP] today...it was a close call but recovered yesterday but by the end of the day it fell hard and tripped the sale. Here is the history for this stock while in the portfolio



Well adding the dividends in with the capital gains realizes a decent return for 6 months...I could have got more a month or more earlier but I am happy with this return as is...

********************************

Well now, I have decisions to make as I have about $8000 of cash lying around.

I am toying with a couple of options

#1 I am currently scanning for a new prospect....I should have that scan completed by Monday...(I have done the scan based on the criteria in the last 2 posts and have 38 companies to evaluate...I will be showing those steps in the next couple of posts...if I find a slam dunk in these I will spend some or all of the money.

#2 The TD Bank stock is doing very well...I would like to add another 100 shares to boost it to 500 shares that will cost about $5600

Lakeshore gold is breaking out and I should then add the balance of the money (about $2500 or about 2300 shares).

A lot will depend on the results of that scan....nice options to have though....

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  #207 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well I completed the scan and came up with 38 possibles. Bare in mind I have made this scan across all sectors. There are times when I want to select from a specific sector and I would probably vary my selection criteria.

For example, If I were looking for a high tech computer stock I would not limit my P/E range to 5-30...a computer stock with a P/E of 5 would be a pretty dead stock

So here is a screen shot of my scan results in Excel



the parameter results are shown and the scan results are sorted by share price high to low.

What you are looking at is the first tests I do which are mainly Fundamental in nature. I want to know the business, its website for more info in future. A subjective look at the company's debt and revenue and comments.

This is laborious but I don't mind doing it...I want to find a stock that will be one that I want to hang onto for at least a few months. If you were daytrading this is a waste of time....anything can happen in a day, you need another way to find those candidates. But I have a long term view...I don't want to be frightened of dips in price simply because the market is nervous...those would be buying opportunities. I don't want to be glued to a computer screen trying to read nuances in every dip, rise and fall of the share price...SO I want to find a fundamentally sound company...at least as far as I can determine it (still learning that aspect).

this is the site where I do this kinda work

Stock Market Quotes | Stock Market Quotes and Symbols

this is the main page and shows TAG Oil [TSX:TAO]....this gives a summary of the company including chart. The chart does not look encouraging but that is not of interest right now...I want to understand its quartrely report data

Balance sheet (quarterly)

Stock Market Quotes | Company Financials, Financial Information

despite the bad chart....you will note that the company is debt free! No short term debt...no long term debt. This is encouraging but if it has no revenues then this is a dead stock...so it is just 1/2 the story

Income Statement (quarterly)

Stock Market Quotes | Company Financials, Financial Information

Well...well...well....look at that....it HAS a nice rising Operating Revenue AND the Net Revenue is trending up as well. See how it was losing money a year ago...but now it is in the Black

As a result you see I have given it a double A rating in my spreadsheet.

That is as far as I will go right now....later I will resort the companies to show the "A" for debt and revenue and the Double "A"'s will get more attention...if there is only one of them I will look at "AB" and "BA" companies but will discard any that are less than that.

Debt and revenue are that important to me as a long term trader....other long term traders may have different criteria and I would be interested in hearing them....

Back to work

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  #208 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

OK...several hours later I have arrived at several sets of stocks following a basic Fundamental Analysis

Here is the result



You can see I have divided them on the basis of Debt/Revenue first...then by share price in each section.

Revenue trumps debt load in my opinion so you can see I favour "BA" stocks over "AB" ones but all will be looked at.

As you can see, we have a nice selection across sectors with O&G stocks leading the way followed by mining....that is because Canadian stocks are dominated by commodities.

you will also note that about half of the "winners" are between $1 - $5....the hated penny stocks

BUT...these stocks have solid fundamentals with respect to debt and revenue. I have not found that stocks in this price range to be very reliable in USA stocks...but it would be a mistake to ignore such stocks in Canada IMHO

Now I will sort through these stocks in the first 3 sections....I have some biases...for example I HATE drug companies and diamond mine companies have burned me in the past....there will have to a pretty compelling reason for me to keep these in the race.

But I am tired now and it is sunny and it is the time of the world famous Calgary Stampede...the heat of the day has gone....time to get out and do something

I hope you find this interesting....comments are welcome

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  #209 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

well you have to pare down the list somehow....so I took each section (not the bottom one) and ran a comparison of performance over the last 2 months and chose the picks that scored over 20% here are the results







In general I picked only those stocks that ranked over 20% except in the first graphic where I chose HWO.TO which was only 18% in the comparison but look at the sudden rise in the last few weeks .... so I kept it.



I kept HWO.TO for the last comparison but it lost out to the others in the final comparison.

This is a new procedure for me. I have never been this systematic before...but that is what a fantasy portfolio and Journal is for. Basically I think any of these four could be a choice for long term....But I have to make only one choice so someone has to be the winner

the next step is to look at their charts .... that come next.

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  #210 (permalink)
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Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

well I have come to one decision

I am entering a limit Buy order for Lakeshore Gold [TSX:LSG] for 1300 shares @ $1.11/share

This stock is taking off ...or let us say I am extending the gamble that Gold will show some positive movement.

I am stuck on the fence on the new stock to buy from that scan. In the previous post I had written off High Arctic Energy services [TSX:HWO] but on closer examination I am not so sure I should pass it up



#1 The P&F shows a lot of potential IF the share price can breech the resistance at $5.65...this event will trigger another nice run

#2 You can see the resistance/supports here very easily in this chart. You also see the Slow Sto and MACD rising which usually happens before a bullish outbreak....the BBWidth is still falling so a breakout is not guaranteed until it is rising along with the other 2 indicators

#3 there are mixed messages in this chart...the CMF is not in good shape (Bearish), the RSI is rising (Bullish) and the ADX DI+/- is mildly bullish with the green above the red but the two lines are converging...not diverging...so the bull cancels bear leaving an overall of mildly bullish

#4 the Ichimoku is a little better.... the share price crawled above the cloud and an attempt to return into the cloud was denied, the CCI and OnBal Vol look fine

SO....I will wait to see whether this resistance breech occurs.


Another potential stock is Lucara Diamonds [LUC:TSX]



CHART #1 This has been an amazingly bullish stock for 2 years now rising from $0.55 to $2.80 falling back to $2.72. There is Nothing wrong with these charts....nothing at all...you have a diamond mine that has suddenly broken out 2 years ago and it has not looked back.

My gut bothers me though...at some point there should be some profit taking...doncha think so???

I am not bothered by the so-called over bought indications of the RSI in Chart #3.... it could stay like that for months...falling below 80 would be mildly bearish...but while it is above it is still bullish to me. The ADX DI +/- is mildly bullish now...it has had a good run but there is a sign that those green/red lines might start converging. The CMF is bullish as it is rebounding from a fall

Chart #2 shows a stutter step in June where the price started in consolidation but it took off again...the indicators are all Bullish...that goes for the Ichimoku chart #4...everything is bullish!!!!!

But this is a diamond mine...I have not had good luck with such mines, though it is South Africa which admittedly has a good history....

Looks like they are finding big diamonds

Stock Market Quotes | Stock Market Quotes and Symbols

Stock Market Quotes | Stock Market Quotes and Symbols

I guess that is it....but my gut bothers me for long term...in a way I would like to see a pullback and consolidation for a while then another breakout....this sounds too-good-to-be-true....but maybe it is my paranoia seeping through {sigh}

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  #211 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well I got my order for 1300 shares Lakeshore Gold [TSX:lsg] for $1.11/share right at the morning bell



If you broke the time into minute intervals you would have seen about 50,000 shares traded in the first minute so 1300 would have been filled early.

Overall though this has been a rough start to the week...I will be updating the portfolio tomorrow for mid-week status...hopefully we rebound a bit.

LSG.TO looks great though so far

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  #212 (permalink)
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Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Glad to see futures.io (formerly BMT) up again...I missed it yesterday and did not have a chance to post my mid week status so here it is



it looks bad for this week but really it was worse last Monday. If things keep going as they did yesterday we may escape the week with a profit

GOLD is breaking out

it is becoming decidedly bullish as shown in this chart



Remember months ago we had triangle resistance/support lines but they were descending triangles and we saw the price of gold hammering on the support lines until they broke ....just the opposite is happening now. The triangles are ascending and the resistances are being hammered til they fail.

$1350 should be a stumbling block... but that is breached and we head on to $1400 that will be exciting.

For the time being I have parked my scan for more study...so far I have not found a keen prospect except that diamond mine in Africa [TSX:LUC] which has had a run for too long and I fear profit taking. [TSX:HWO] looks promising too but it has a huge resistance to pass at $5.65 and it was denied just recently.

But with gold climbing like this a much better prospect is to add again to my existing holdings of Lakeshore Gold Corp [TSX:LSG]...this has gained 10% since buying it a feww weeks ago...I added 1300 shares at the beginning of this week and I am trying to add 3000 more this morning....I won't chase it if it skyrockets far above the upper Bollinger band as it should pull back if it does.



Right now the chart is showing me a beginning of another bullish run....and given its past performance and the rise in gold price yesterday evening...I think this augers well.

I am not diversifying among gold stocks....there is no point to it as all gold producing stocks shoul perform similarly and LSG has done well so I will ride this horse.

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  #213 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

We did not get LSG at the opening as it opened at $1.20 and climbed to $1.23....but it is starting back down slowly and is currently at $1.21 so it may well fall back to $1.19 before the day is out.

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  #214 (permalink)
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Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well I got my price of $1.19/share for Lakeshore Gold Corp as can be seen by the following chart



Now we have a decent share volume to make some real coin. The price fell at the end of the day, perhaps day traders where grasping profits at the end of a nice early run...



Gold itself had a downward trend once the markets opened this morning....LSG hung onto its early gains then (and it is only a guess on my part) the daytraders did not feel confident in their positions and the price pulled back....I'll take the gift....here as well as in my real portfolios.

I truly believe we are headed for at least $1350...and if it is struck with force we stand a good chance to breach that resistance and head to $1400

So...how do I see the movement of LSG for the forseeable...I look at P&F charts for that and I don't use traditional box sizes. I personally think the charting method was devised in the first instance for stocks over $20...the box sizes when looking at sub-$10 are too large to show meaningful movements.

My rule of thumb is to use "User Defined" box sizes as in the following:

Share Price ......................... Box Size

$0.01 to $0.50 ..................... $0.01
$0.51 to $1.00 ..................... $0.02
$1.01 to $5.00 ..................... $0.05
$5.01 to $10.00 ................... $0.10
$10.01 to $20.00 ................. $0.20
$20.01 to $35.00 ................. $0.25
$35.01 to $50.00 ................. $0.50
$50.01 to $100.00 ............... $1.00
$100.01 to $200.00 ............. $2.00
$200+ .................................. $5.00

These are guesstimates...depending on the volatility of the share price I might go to the box size above or below the one suggested above...you want a clear readable chart. Here is the chart for LSG with a box size of $0.05 as it is at $1.18/share now



Currently we are straddling a support between $1.15 - $1.20 looking at this chart...sometimes when I want a bit better look at a chart in the $1 range...I will drop the box size to $0.025



See how that makes a difference....NOW you can see clearly that we have breached a pretty strong resistance between $1.15 and $1.175 (rounded to $1.18) to the left we have 2 tops of "X" columns and one Bottom of "O" column...we rose significantly above today to $1.24 before falling back to above what is now a strong support.

Good...the first P&F shows a bit of a struggle of minor resistances til we get to $1.35 ... that is our target right now...IF we pass that we are headed for $1.70....that is enough targets for the present...each one is a step or wall along the way.

Wish the rest of the portfolio had such a good day

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  #215 (permalink)
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Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well this was a pretty rotten week overall but there is a bright spot.



considering the losses in this portfolio this early week we came out of it not too bad. The real bright spot is Lakeshore Gold [TSX:LSG]....three weeks and we have over 12% and the price of gold is only slowly moving.

If these other laggards get moving...this will be fine

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  #216 (permalink)
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Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well, it had to come sometime, didn't it?

We had almost $100/oz rise in price in the last 6 weeks, the first real positive run in Gold price since Jan-Mar this year....so it is all over???

https://www.kitco.com/reports/Commodities_Daily_20140714_132832447.pdf


Quoting 
In our view, from a tactical perspective gold is moving into overbought territory, especially if read in conjunction with demand from Asia and China. With the rally in the gold price over the past two weeks, the SGE premium in Shanghai has come under pressure, with the premium trading as low as -$3.04 last week. This morning it edged marginally higher, registering a low of -$1.86 and a high of $0.99. Our tactical view remains that gold is a sell into rallies. Go ld support is at $1,305 and $1,296. Resistance is at $1,332 and $1,349.

the bold italics are mine... I don't really understand what they are saying here...are they saying gold is going to plummet more but wait for rallies and do your selling then??? Personally I think this is a pretty premature advice.

I do agree with their resistance/support levels (horizontal) though and I will show that in a minute.

The above analysis makes it sound like North American markets caused the decline. Well here is a 5min chart of the latest prices for gold.



As you can see that decline started in the weekend when North American markets were closed. To me the final drop at the bell was just a reaction to the Asian markets nothing more...an that "panic" lasted all of 2 hours or so and now there is a definite plateau.

They comment on the market for gold being overbought... Other than 20/20 hindsight on the fall, I fail to see how from a charting point of view that the market was overbought...unless they are faithful followers of Slow Stochastics.

Here are my charts






there is nothing here to indicate the market was overbought...the Slow Stochastic is the only indicator showing it in that range and it has been there for almost a month...where was the "overbought" warning from the media prior to this.

these are still good looking charts the current price of Gold has been in CONSOLIDATION since that last bounce on June 23...a very nice consolidation with a positive drift and the FALL to $1307.00 has just brought it to the neighbourhood of the 20day SMA (around $1313 on Friday) WHICH IS A NORMAL EVENT after the peak of a rise and consolidation.

We shall have to see the effect on the Slow Sto, MACD and BBwidth after today's trading but UNLESS the Slow Sto and MACD take a severe dive and the BBwidth rises sharply there is nothing to worry about.



Looking at this chart...you can see the price has fallen to a pretty strong support....the horizontal $1307ish support PLUS the diagonal support line as well

So what caused this drop over the weekend...well India is a large consumer of the metal and I found this article from an Indian source.

Gold price crashes, witnesses biggest single-day fall in 2014 - Business Today


Quoting 
Gold prices plummeted by up to Rs 800, the biggest fall in a day this year, to 10-month low levels in major bullion markets of the country after the Reserve Bank of India (RBI) eased import restrictions on the precious metal.

Traders attributed the sharp fall gold prices to the central bank's decision to ease import restriction on the metal which triggered heavy sell-off by stockists.

The RBI allowed select trading houses, in addition to already permitted banks, to procure the precious metal to boost exports.


.................................


Traders said there are expectations that RBI's move would increase supplies and reduce prices in the domestic market.

NOW THAT MAKES SENSE to me....no hand waving "overbought" nonsense...the Reserve Bank of India made a major decision that effects the price of Gold in their country... increasing supply there.

I have to wonder if India - a major consumer of Gold - increasing its purchases of the metal will be bad for the world price??? I don't know...but it is not like they are dumping Gold onto the world market.

*****************************************************

So how has this affected my one Gold stock, Lakeshore Gold [TSX:LSG]



well even this chart show a normal price pullback....on Friday the price rose above the upper Bollinger band ...it had been at or above that BB for 4 days...that is a rarefied atmosphere to be in...prices are rarely above the Upper BB for more than 3-5 days....the next day or so will tell the tale but the Slo Sto is still over 80 this drop showing only a minor down tick, the MACD is showing a plateau at a higher high and the BBwidth still shows a positive slope albeit reduced.

Conclusion

Is the sky falling for the price of Gold....I doubt it

Has peace broken out in the Ukraine, Iraq or Syria?

Has the Bank of Portugal (one of the death watch banks) turned it around and is resolving its debts...just the contrary from what I read.

Nothing in the world has changed other than India lifting restrictions on importing Gold making it cheaper in that country and creating more demand in the rest of the world

Unless something dramatic happens to further lower the price of gold...this could be a buy-on-dip opportunity IMHO

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  #217 (permalink)
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Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well all things considered with respect to the 2%+ drop in Gold price we are not doing too bad.



You will note that we lost Bellatrix BXE.to and that is really too bad as I had high hopes for that stock before they pulled that stunt with the private placement. They are using this money for debt paydown and reinvestment and they apparently have great O&G properties....so they will be definitely on my watch list.

But on the other hand...I am very happy with Lakeshore Gold...it is holding its own when other gold stocks are failing as can be shown by this chart



Gold Corp [TSX:G], B2Gold Corp [TSX:BTO] (which I used to think the world of) and Argonaut Gold [TSX:AR] all performed in a similar manner over the last 10 days...but Lakeshore gold really out stripped them all.

Gold's plunge has halted, at least for now...if it takes off again or just continues its positive slope...we will see LSG.TO continue its rise....I am temped to add a few more thousand shares to this stock.

We collected some dividends....I am really thinking hard about what I do with dividends...currently I just throw them into common cash....but I don't know if you are following my discussion on High Dividend stock plays



this tool which I will discuss more has opened my eyes as to what Dividend Reinvestment accomplishes. I don't like DRIPS as done by the Broker...yes you save commissions but they did not appear in my normal portfolios regularly whereas dividends do and if I manually do the reinvestment then I have control...I feel much better that way.

More on that in future posts.

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  #218 (permalink)
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Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well thing were basically no change tough we suffered a small loss it is not serious.



I am sitting on a sizable amount of cash and not sure what to do with it...that screening I did a while ago has not resulted in me finding a good stock to put money in...O&G stocks are failing me and I am in no hurry to do anything with Gold....just when you think it has a direction it seems to reverse. As pointed out in an earlier post...I am happy with Lakeshore Gold [TSX:LSG] or [AMX:LSG]...I have a sizable investment so far and perhaps I will add to it if freak'n gold would show a direction.

I am pursuing the analysis of dividend paying stocks....I want high dividend paying stocks that grow slowly. Why slowly? because I want the dividends (and reinvestment...compounding) to be the driving force to the stocks overall performance...not the capital gain.

Why do I want this??? because if the stock is a high flyer then the losses due to the downturn in the share price outstrip the gains through dividend payout.

I may be looking for a holy grail here but now I have a tool to help me. So far the tool (talked about in previous posts) is showing me nice stocks that have had great year over year performances....but when you look at them it is not the dividends doing this...I haven't looked a Canadian stocks...yet and there may be a difference between Canadian /US dividend stocks.

I looked at Vanguards Dividend Appreciation ETF VIG. On the surface it looks like this should be a high dividend ETF but it is not...it looks at stocks with a history of constant dividend increases for its component stocks.

As itself the ETF only pays a 1.92% dividend...combining the reinvestment of dividends with capital gain of this ETF gives it a gain of 25.08% in the previous year and 11.12% in YTD so far.

For fun, I decided to look at the top 20 stocks that made up this ETF...none of these stocks had Dividend yields over 3% but many had great previous calendar and YTD performances

Ticker.................. YTD performance ............... Last year performance

JNJ ........................... 27.57% ................................ 32.39%
MMM ........................ 13.84% ................................ 49.01%
WAG ........................ 57.13% ................................ 52.40%
EOG ........................ 93.85% ................................. 34.11%

but there were some interesting ones too

NKE ........................ -2.01% ................................. 53.01%
WMT ....................... -2.53% ................................. 16.77%
CAT ........................ 53.00% ................................. -1.91%

So part of me says....hey! you don't need to be in that ETF...you can make more money sorting out the good performers...but we are back to sorting out good capital gain companies....not good dividend payout companies....hence the potential wild swings in overall performance

In a way it belies the statement that dividend stocks are not decent capital gain stocks, eh?

I am going to continue this investigation and report on my findings in the future.

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  #219 (permalink)
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Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Ok...I have started my in-depth analysis using that Dividend Reinvestment Calculator that @deaddog brought to my attention last week. I truly think this will revolutionize how I chose stocks for the future. I am most encouraged by the results I am getting so far.

so here is how I source and process the data....I should point out this is a long labour intensive process...but once every thing is set up I will do this process with the original data set...the reason being the first cast of the net catches many losers with the winners...but today's losers can be next year's winners so this is data collection is not a one shot deal.

So for the first cut of data I do a scan With the Globe and Mail free globeinvestor filter. The settings I use are pretty simple as shown below:



notice my share price range starts at $1.00 and ends at $60.00. Do I expect to get a good dividend stock at $1??? not sure but it is worth a try. At over $60 the share price is too expensive for me to have a decent number of shares.

I want high dividend stocks...not ones that pay a trivial 1% to 4%...there are lots to chose from...I limit the return to 20% ... I doubt I will find a good stock with a 20% dividend...a company with that high of a dividend is probably using its dividend yield to attract investors where they cannot do so in any other way.

it must look funny to see a Revenue lower limit of $0.00...but I want companies that make money to be selected

So I run the filter and collect 114 potential companies

Now comes the labour...I set up a spread sheet to record the data and now plow through checking each company for the YTD return, last calendar year and past 5 calendar years. I have a rank system for each analysis result...it is simple...if the result is a positive value the rank is "1" if not it is a "0". I do this so that later I can use these numbers to sort the data.

Here is a sample of one stock analysed for YTD return...I start on Jan 2 as Jan 1 is a holiday and no data.



Not a bad return, eh....now that is not due to dividends alone....this is mainly due to capital appreciation.

now I test from Jan 2/13 to Jan 2/14 (1 year) and again Jan 2/09 to Jan 2/14 (5 years)

What I want to see is positive returns in all three results and not simply a high result for one year.....if a result is high the company had a good year...but not a consistent result...year after year.

As I work through the list...If I like a stock's results I highlight it green....the blue ones were great except for the YTD result....I want to look at those as well...why...because they may recover from the bad times this year...I want to understand why they are in trouble before I reject them totally

This work is on-going at present...I am about half way through...here is the result



So this is what it looks like after the sort....bear in mind I am only 1/2 way through this spreadsheet.

I am very encouraged...here are charts for 3 of these less expensive stocks.



Of these three I like the Student Transportation stock the best...a steady climb over 5 years and is at a resistance level at $7.00 which if passed will be nice...that requires further study.

Second I like Supremex...very inexpensive...has recovered from its fall nicely and also is poised to pass a resistance

Coast Wholesale is a little too volatile for me on first blush...had a pretty good year but is it due for a fall??? more study is required.

This is just a sampling of what I am doing....but the results so far are such that they will be a definite reason to rebalance my tax free accounts (TFSA and RRSP)

That Dividend Reivestment tool really helps evaluating stocks. The stocks that filter out are good dividend stocks and ALSO good for capital gains...those that say buy and holding dividend stocks is foolish have rocks in their heads IMHO.

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  #220 (permalink)
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Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Hmmmm........I am wondering about the accuracy of the data I get from that Dividend Reinvestment calculator

I still like it from the point of finding potential stocks for investment but I question is accuracy.

Consider this pic



Here you see three potential investments in JP Morgan [JPM]

If you look at the value after the time period the Annulaized total Return % is the same if you invest $1,000 or $10,000 or $100,000 and the NOW WORTH numbers for the $10,000 or $100,000 are simply 10 or 100 times the $1,000 investment.

This should be impossible. With $1,000 initial investment does not generate enough dividend dollars in one year to buy a single share of JPM

But by my calculations $100,000 should generate enough money each quarter to buy about 14 new shares and thereby reinvest them

so reinvesting the dividends should give something like the following yields:

$1,000 ============> $1,312.30 or a gain of 31.23%

$100,000 ===========> $133,591.95 or a gain of 33.59%

and this is what you would expect....put more money in get out proportionately more money in return...it is only a few thousand dollars but hey I think it could be a lot more if you had a $10 stock with say $10% return.

I have addressed my concerns to the website...we shall see how they respond.

Having said that however...whatever or however the numbers are calculated...I still like the stocks that it revealed as potential good pics. I have finished the initial cut and now I will look at the good ones in detail to see which ones make the final cut.

EDIT: Well I am not wrong in questioning the data...they responded almost immediately only saying..."This is weird"

I hope they are more forth coming....ahhhh takes me back to my QC days as a programmer 15 years ago...

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  #221 (permalink)
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Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

OK....finally after 3 emails they admit the "state secret"...they sum partial shares

In my experience with DRIPS...and it is a TDWaterhouse/Canadian experience (I am not sure it applies to other Canadian brokerages), we don't get fractional shares. The shares are not held for me at the company, rather they are delivered to my brokerage account. I first get the entire dividend in cash...that is what I pay taxes on. 3-10 business days...the nearest whole number of shares based on the dividend is delivered to my brokerage account and ,as if I bought them, my account is debted based on the closing price on the day of the dividend less on occasion a discount of 0.5% - 1% and NO commission charges for the transaction.

So...I have an accurate value of cost for the shares for capital gain purposes later when I sell them. and the dividend taxation is straight forward.

Now I can move on...I am ticked that it took so long to get this basic information...financial calculations should not be a mystery...not if you are going to make decisions based on them.

[off my soapbox now]

I have finished my initial cut and have now to do normal TA and FA to arrive at the final cut

Student Transportation [TSX:STB]
Pengrowth Energy Corporation [TSX:PGF]
Dividend Select 15 Corp. [TSX: DS]
New Flyer Industries Inc. [TSX:NFI]
EnerCare Inc. [TSX:ECI]
Whitecap Resources [TSX:WCP]
Gamehost Inc. [TSX:GH]
Morneau Shepell Inc. [TSX:MSI]
Veresen Inc. [TSX:VSN]
Enbridge Income Fund Holdings [TSX:ENF]
Algonquin Power & Utilities [TSX:AQN]
Can-Financials Income Corp. [TSX:FIC]
Contrans Group [TSX:CSS]
Whistler Blackcomb Holdings [TSX:WB]
Russel Metals [TSX:RUS]
National Bank of Canada [TSX:NA]
BCE Inc. [TSX:BCE]
TD Bank [TSX:TD]

All of these are pretty good choices

some quite cheap : Student Transportation [TSX:STB] share price $7.13 yield: 7.85%

some quite expensive : TD Bank [TSX:TD] share price $55.67 yield: 3.39%
(it was 4% when I started this...it is already in my play portfolio so I will probably keep it as it is a good performer)

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  #222 (permalink)
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Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

I still have not made up my mind on trades but this week is starting out right anyway


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  #223 (permalink)
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Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

well I applied my limited and admittedly subjective Fundamental Analysis regarding only debt and income to the list I showed 2 posts ago.

I eliminated 6 of the stocks and show the winners of this cut in the following table



the selection had to have at least a green income....I believe you cannot ignore debt but income will overcome the debt issue especially rising income.

Now comes the final selection...I want 3 to 4 final choices....

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  #224 (permalink)
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Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well I still have not made my decision yet because I got distracted by that website with the Dividend Reinvestment Calculator.

Since it worked on shares only including partial shares...and not the Dividends and residuals when adding up total shares after the dividends are issued and waiting for at least a sum of money over the share value before adding a complete new share....I wondered if they IN FACT test to see if they we actually dealing with a dividend stock???

Apparently they do not.... but don't tell them as I have found this a decent way of filtering out stocks...I certainly came up with a nice selection of dividend potential stocks using their website.

To test my hypothesis I decided to use my Gold stock in my fantasy portfolio Lakeshore Gold corp [TSX:LSG]

to get a full year of test data (a partial set would be "annualized") from Jan 2/2013 to Dec 31/2013

and...lo and behold it seems to work.

Here is the summary page for the stock

Stock Market Quotes | Stock Market Quotes and Symbols

As you can see no dividend is issued...I checked back 5 years just to make sure.

Here is the Dividend Reinvestment Calculator result



no problem generating the one year investment return of -36.52%

here is the chart for that time period



Well the negative sign looks right...the Jan2/13 opening price is hard to pick off so I went to Yahoo/finance/historical records for this stock to get the closing prices

https://ca.finance.yahoo.com/q/hp?s=LSG.TO&a=00&b=2&c=2013&d=11&e=31&f=2013&g=d


Jan 2/2013 opening price: $0.78
Dec 31/2013 closing price: $0.49

Percent gain/loss = ($0.49 - $0.78)/$0.78 x 100 = -37.18%

As close as "damn" is to "swearing" as my father used to say.... or as my brother would say "Good enough for the girls I go out with!"

Does it surprise me that this works for non-dividend stocks??? Not really considering their reluctance to discuss anything about their application....but I am not going to tell them about it as I am not aware of any other software that makes such a calculation....so let it be our secret

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  #225 (permalink)
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Calgary Alberta/Canada
 
 
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Well I have made my final decision...here is the table of my final evaluations



the stronger the green color the more favourable the stock. As you can see I like the banking stocks...both banks percolated to the top. I already have TD Bank in the portfolio so I won't be adding National Bank of Canada...I venture to say I could put any Canadian bank in there and get much the same result...I like TD Bank so I may add another 100 shares of stock...I won't do that now ... only if I have money left over.

The stock I like most is Enbridge Income Fund Holdings inc [TSX:ENF]..

I have placed a Limit Buy order for ENF.TO : 500 shares at $29.50/share



As you can see I have placed orders to sell FP Newspaper and Pengrowth Energy ..... this will allow me to purchase 2 more stocks ....probably 2 of the following 3 stocks...either Enercare [TSX:ECI]. Gamehost [TSX:GH] or Algonquin Power [TSX:AQN]...currently I lean to ECI and AQN

Having a good week with one more day for the week...let's see if we can hang onto these gains.

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  #226 (permalink)
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Calgary Alberta/Canada
 
 
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well that was fast...I got my prices...I could have made a few cents more or paid a few cents less as the case may be but that is not the issue here as we play long term

So I now own in this portfolio a total of 500 shares of Enbridge Financial Holdings @ $29.50/share

I sold 2000, shares of Pengrowth Energy @ $7.26/share

I sold 2000, shares of FPNewpapers @ $4.25/share.

the Enbridge purchase killed my existing cash on hand...the sale of the above gives me about $24,000. At least my brokerage (TDWaterhouse), will allow me to use those funds right away since if i make a purchase today the settlement of the sales will be finalized the same day as the settlement of any purchases...and they know I don't daytrade.

in the previous post I said I leaned to the purchase of Enercare [TSX:ECI] and Algonquin Power [TSX:AQN] so let us do it

At the time of this post AQN.TO is priced at $8.15 and ECI.TO at $13.76



So I will purchase 2000 shares of AQN @ $8.15 as I think it will rise


that will leave about $24,000 - $16300 = $7,700 for ECI.TO



I think this will ....Geeze! that can go any way...I will buy it at $13.76

I will buy 500 shares of ECI @ 13.76

that will leave a slush of $50 or so on hand after everything

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  #227 (permalink)
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Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well I lost a few cents on those guesses but it does not matter...here is the status of the portfolio as of closing today



Had a great week gaining 2.84% and raising the gain to almost a high...I expect the changes I made will keep the trend running

Have a good weekend

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  #228 (permalink)
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Well the week has started well...the portfolio gained almost 0.50% for the day...may this continue

I think this portfolio will stay the course for several weeks...barring a disaster of course.



gold is currently rising above yesterday's market numbers but it is so fickle (manipulated??) who knows...LSG.TO certainly has responded well to the last rise...looks like a fine pick.

My interpretation of charts is a lot different than most. I have, over my studies, worked out some unique relationships...at least I have not seen them touted anywhere else.

Now that I think things are settled in I will describe how I use indicators, overlays and what I think is a bullish or bearish position. I am not 100% different from the traditional but I do depart from the conventional in many ways.

I think the reason is that most people who write books on Charting do so without defining the type of trading that they are targeting.

For example: you note that I do not use a signal line in my MACD chart...I don't find the signal line to give a timely alert in a daily chart...it is my belief that too much goes on within a daily result to give a meaningful result....ditto to the crossing of the zero line of a MACD chart...what does matter is HOW YOU ARRIVE at that point.

However, in a very short interval...say 5 minute intervals...while I still favour the interpretation without the signal line, it does give a visual that can prepare you for a change coming....so from a daytrading viewpoint or in my case timing an entry/exit in real time I would keep the signal line.

I will discuss this indicator in far more detail in future with many examples to support my positions.

Should be fun.

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I am going to talk about more traditional ways of charting...I use a typical chart with an X-axis of evenly timed intervals....1 minute, 5 minute, hourly, daily or weekly intervals.

My discussion does not specifically relate to TICK charts. I never knew such charts existed and embarrassed myself when I first saw one here You may see something in my approach that you might want to try in your own indicators...I know from reading here that many develop their own indicators and I suppose sell them. By reading my posts you may find a new approach and if you do GREAT...it would be nice to know I helped but that is all I will get out of it.

For the most part my discussion will be aimed at the newbie to TA...it may be too basic for many...it gets better as I go along when I discuss using indicators as a group consensus...I am certain that there is something for everyone.

I know that the use of indicators are not held with high respect and I can understand why. I think that many newbie investors spend time in the fruitless search for the absolutely perfect indicator but in my experience there are many indicators that when used in ways that make sense to you...give very good information...But I am here to tell you that all indicators lie or give a head fake that screws up your trade.

However, they don't all lie at the same time!!! And this is important to know. The object of the game is to find a suite of indicators that do not give the same look .

For example: you should choose ONLY ONE of the following indicators: ROC, TRIX and MACD in your indicator mix.



See how you are basically getting the same look even the signal lines on the MACD and TRIX cross at about the same place.I prefer MACD myself and will talk later about its use. See how the dips and dives of each indicator are basically in sync...ROC is too choppy for my taste. If you used all three or two of these indicators in your analysis...even though they are calculated differently...you would get the impression that these are confirmations of an action to come.

A combination I use over and over again and will devote a whole post or two to eventually is Slow Stochastics, MACD and BBwidth...look at this chart:



You can see that this combination of indicators (with modifications...the reasons why to come...such a tease ) gives different information at different times...it may seem that the BBwidth tracks the MACD...but you will see these indicators go in opposite directions in this chart... see at the beginning of this chart months of August to Oct...this combination is very significant as to what is going on.

I will discuss the subject of Resistance/Support in the next post. The reason is that resistance/support applies to more than just price...it can (should) be applied to indicators as well. So it is important newbies to use this in their bag of tricks

Here is a table of contents of what I will be talking about for the next little while:

1. Resistance/support (one post)
2. Bollinger bands and BBwidth (2-3 posts)...yes there is that much to talk about. Most charting books devote a page at most to this important overlay and its equally important Indicator
3. MACD (1 post)
4. Slow Stochastics(1 post)
5. How to interpret posts 1-4 as a unit (2-3 posts)...I will show how they can be used for long or short positions

Then I will take a break as that is a lot of information to digest

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  #230 (permalink)
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Calgary Alberta/Canada
 
 
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Things are perking along nicely...our portfolio is almost at an all-time high




Next post will be on use of support and resistance trends...one complete post for sure....perhaps 2 now that I have thought about what I will say.

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  #231 (permalink)
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Posts: 934 since Feb 2014

This post is really aimed at the newbie to charting, though perhaps more experienced traders may enjoy reading this post.

I have always been fascinated when I first started charting at how a price could rise or fall to a certain value and change direction...not only change direction but also fall or rise to that same level and repeat the process all over again..multiple times...I was introduced to the concept of Resistance/Support.

Consider the following graphics which have the look of Point & Figure charts (more about that soon.)



these are simplistic examples of resistance/supports

Chart A is a horizontal resistance/support chart. Note how it rises to that red line then falls back to the green. Think of it being in a two story house. You want to get to the second story and you climb to the top of the stairs only to find the door locked...the ceiling of that first floor is a resistance to your ability to reach that second floor....so you trudge back down to the floor and some time later climb the stairs again to try the door to the second floor....locked still. So you go up and down those stairs until one time the door is open and now you are on the story floor which is the first story ceiling.

now you can walk on a solid floor until you take the stairs back down to the first story floor.

Always remember that: ceilings become floors when rising through them and floors become ceilings when you fall below their level

Said another way as a stock passes through a resistance, that resistance now becomes a support

the more difficult it is to pass a resistance...the stronger the support that line becomes as the stock rises further.

Just drawing lines helps a lot....however, understanding the battle that goes on between buyer and seller makes these trend lines more meaningful.

Let us consider a grocer and the customers he has buying his tomatoes.

This grocer buys his tomatoes in bulk...beautiful, ripe, red tomatoes...So he posts what he thinks is a good price (P1) and puts them out for sale... his customers love then and he realizes he can get more money for his product...also he has less product to sell so he raise his price to (P2)...they still sell well so he raises the price to (P3) and then (P4) when suddenly the tomatoes are priced too high for his customers and sales stall there (it hits a resistance).

Now tomatoes have a shelf life...he must sell then before they lose quality..so he lowers his price to (P3)...customers come back...lowering the price further gets more customers back....tomatoes are finally back to (P1) before the seller (the grocer) digs in his heels and says "I cannot lower my prices any further or I will lose money" (the support).

This up and down movement continues for weeks as he buys and sells more tomatoes. He won't sell for less than (P1) and the customer refuses to pay more than (P4).

Then one day just after he buys his bulk buy of tomatoes and he raises his price again to (P4) he realizes...all the other stores (his competition) are sold out of tomatoes...his tomatoes are now worth more and he can get even higher prices...he has finally broken that price resistance level and sells even more as people realize he is the only game in town...he steadily raises his price to a new high (P6) and when the price falls to (P4) the seller digs in his heels and refuses to lower his price further...afterall you want tomatoes...he is the only seller around so (P4) is the support price now and (P6) is the new resistance price now.

Sometimes it is easier to think in terms of tomatoes to understand this concept.

Now consider Chart B this is a diagonal resistance/support pairing....Who is winning the tomatoe battle?

The buyer is winning....the maximum he will pay is falling with time and the seller is dropping his price lower on each cycle....this is a bear resistance/support channel if the channel had a positive slope it would be bull resistance/support....this regular pattern if it breaks outside these lines will result in a significant movement but in the case of chart B...one would EXPECT the breakout to be to the downside simply because the seller is taking more and more of a beating....however, there is no reason that the price could not break out to the upside and go through the resistance....nothing is guaranteed so the critical times to watch such a formation is when the stock rises to the resistance or falls to the support....in between these lines is not as important.

Consider Chart C Is this bullish or bearish????

Well think tomatoes again....the buyer is beating the grocer's price steadily paying a less maximum with each cycle. The grocer is successfully maintaining his bottom line. However, this cannot go on forever...eventually the maximum buyer's price and minimum grocer's price will be the same....someone will have to "blink".

This is traditionally a bearish formation (a descending triangle)....when you hit the apex of that triangle usually the the price falls dramatically DOWN...conversely when the buyer holds his maximum price steady and the seller raises his bottom line price (ascending triangle) this is bullish as the buyer will "blink" and accept a higher price eventually

So you see....it is not necessary to memorize patterns...too many charting books (candlestick books are bad for this) want the chartist to memorize patterns and that is not necessary if you recognize the battle between buyer and seller.

USING Resistance/Support trend lines

Well that is the theory behind the formation of R/S lines....now let us look at applications of them

I really like to use Point and Figure (P&F) charts for determining MACRO resistance/support lines...ie: long term not day trading. I can see supports and resistance points over years...no a few minutes this way.

There is a lot to the formation of a P&F chart...they are considered old school (over 100years old) but nothing has changed, they still are a valid chart and one, as I said, usefulll for establishing goals and Resistance/support trends.

Let us look at a chart for TD Bank



A TIP: I don't always print my charts out...I can usually see the formations easily enough....sometime I will take a clear plastic 6" ruler and put it on my monitor screen to "plot" a line.

Ok let's start at the bottom at line (1)

it starts as a resistance line...why because at the time, it was the highest price from Sept/2011 to Jan 2012. See the result after breaking that resistance....that line became a support for thereafter... remember : ceilings become floors as you rise above them. the bottoms of the "O" columns in the red 2 and in the red 6...show the strength of that support.

Line (2), (3) AND (4) make an interesting combination

Line (3) is a nice ascending diagonal support...Line (2) was a "Berlin Wall" of resistance for almost a year!!! In December that wall crumbled and line 4 became the new resistance...normally line 2 would be a great support but that was not the case...line (3) continued to be the diagonal support for almost 7 months.

Then the dam broke....when you have a fight to pass such levels the result of breaching the resistance is usually dramatic...and it was here for sure.

Now when it rose to $46.75 and pulled back that could be a sign the rise was over...it established a resistance point and support at $45.25...things looked more promising when you get a support line (not shown by the double "O"'s at $47.00

then resistance at line 5 turned into a support and Line 7 formed a new resistance with diagonal line 6 as a support. We had a diagonal channel with lines 8 & 9....and the beat goes on.

I bought this stock when the price first crossed $46.78...looked like I made a mistake but the diagonal support line 6 held and now I cannot say how long I will keep this stock but my current support line is $55.25 (line 10)

I might change my mind as time goes on but right now it is headed into the unknown.

Can we use these R/S lines in line charts daily or by the minute....of course!!!! this are what I call Micro R/S lines because they don't last long.

But this is enough to digest in one post....I will continue this in another post soon....Hope you found this usefull!!??

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  #232 (permalink)
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Here is the missing graphic from the previous post....Perhaps the size of the post had something to do with it.....I don't know....but now the first half of the text will make sense (unless this one disappears too {sigh})


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  #233 (permalink)
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Ok ... I hopefully explained basically how these trend lines are formed and how to use them in a P&F chart .... now I can move on to showing how to use them in P&F and other charts.

Basically I use a P&F chart at times when I want a longer term look at a stock's performance. The resistance and support levels jump out at me.

consider Lundin Mines [TSX:LUN]

(A)



Note: that I have made a rather thick line here....if you are rising the tops of "X" columns and bottoms of "O" columns to the left are resistance points...don't be afraid to make thicker lines when you see a small variation....you are mapping out a ZONE of resistance or support. Here the zone ranges from $5.40 to $5.50.

Here is the corresponding 3 year line chart

(B)



the same line is there too but I think you would agree it is easier to see in the P&F chart

But I do use resistance support lines in various charts....you may have followed my GOLD commodity spot price charts.

(C)



now this is a one year gold chart with emphasis one what is happening NOW. The Solid red and green lines are secondary support and resistance lines. From my point of view I would not get really excited about the price of gold....no matter how fast it rose unless it breached solid red resistance line...Similarly I would not get pessimistic about the price of gold unless it fell below the solid green line

(Do you see the support line that runs horizontally at about $1200/oz...if gold falls through that tertiary support line then the pundits of $1000/oz gold might actually be right)

the dotted red green blue lines are the current support/resistance lines ..... very exciting

The dotted blue line AND the dotted green lines are both supports....the dotted red is the resistance line.

See how the price of gold is oscillating downward within the red/blue dotted envelope....see how the horizontal dotted green line is now more significant....there will be a major movement in the price of gold. Remember the buyer/seller scenario I mentioned in the last post.....the buyers are beating the price down lower and lower...the sellers are falling back......things can change but so far it looks like another really bearish correction coming suddenly to me.

Using trend lines to judge an entry or exit price

I do this all the time let us look at the TD Bank for the last 10 days in a 15 minute timeframe

(D)



first look at the dotted R/S lines on the left....see how when the price rises suddenly above the support it becomes a BUY SIGNAL....remember the Buyer/seller battle...that was a bullish scenario that went true to form...the buyers blinked and accepted the sellers high price.

But look at the solid blue/green support and red resistance lines. The channel is ascending like the other....but instead of converging like the dotted lines...the lines are diverging which mean the swings get wilder and wilder.

Eventually the price breaks the green support line and forcefully so....that is your SELL sign.

As you know, I have this stock in my portfolio so I might wonder if this is just an intra-day correction and perhaps at least a hold...or depending on your tolerance for risk maybe an opportunity for a buy back (if I sold) or buy-on the dip action

So I quickly look for a possible support level...I find a resistance line at $56.80 horizontal...will it serve as a support now???? and the answer is YES....

If it had broken that line and I was aware of it (I don't look at charts 24/7) then this would be a hold but I would consider selling if it broke that line significantly.

Frankly, I have several other charts to consult before I make that decision but you can see using trend lines alerts you to potential problems.

can I use this charting tool for an intraday play....I don't do such plays but if I did , I might do something like this IF ALL I HAD TO WORK WITH WAS Resistance/Support lines .... in reality I have many more tools but later on that....

Let us say I have been following DHX since yesterday



I see the previous day that the price has risen above the resistance which has been there for most of the day and buy it at $8.70/share...I might be nervous when it fell immediately but the resistance became a support and the price continued to rise....as the rest of the day continues I revise my support/resistance lines and I hold it over night (yeah yeah I know you would not do that as a day trader but it would spoil the story to sell then )

the next day my faith in my lines is supported and the stock price takes off.....I keep revising my support/resistance lines until there is a definite breach of the support line....then I sell at about $9.20 ....that little 2 hour total play would have netted me about $0.50/share or about 5%

In reality though I would be monitoring with other indicators and overlays as you will see later....BUT if all I had to work with ere resistance and support lines....I would at least make a decent decision.

Bollinger bands is the next topic....that will take at least 2 posts....

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  #234 (permalink)
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Posts: 934 since Feb 2014

Sorry sorry sorry...it is happening again....the graphics are there when I make the post but disappear later. I don't understand what I am doing wrong....here are the charts in the order they should appear

(A)





(B)





(C)





(D)





Again sorry, I will work faster...that might be an issue too as these graphics may have a time stamp if the post is not saved fast....a mystery to me right now

Edit: I added letters to both posts to show where these graphs should have been.

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  #235 (permalink)
 Big Mike 
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Most likely you are accidentally clicking 'remove' instead of 'embed' in the popup window. This removes it from the server.

Mike

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  #236 (permalink)
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Big Mike View Post
Most likely you are accidentally clicking 'remove' instead of 'embed' in the popup window. This removes it from the server.

Mike

no I don't think I am doing that since the charts are in their proper place and I view them in the final post before I leave...It is only when I shut down the computer and come back an hour or so later that they are rendered as an invalid image.

I have been composing these posts within this text box and it can take 30 mins or more...It is my feeling that all but the last image is timed out somehow...that is the only thing I can say....as you can see....I am NOT a newbie at using charts in my posts...but most messages were composed and posted in 10 mins or less....these last 2 big ones take more thought....hence time.

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 Big Mike 
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no I don't think I am doing that since the charts are in their proper place and I view them in the final post before I leave...It is only when I shut down the computer and come back an hour or so later that they are rendered as an invalid image.

I have been composing these posts within this text box and it can take 30 mins or more...It is my feeling that all but the last image is timed out somehow...that is the only thing I can say....as you can see....I am NOT a newbie at using charts in my posts...but most messages were composed and posted in 10 mins or less....these last 2 big ones take more thought....hence time.

There is no timeout. You could upload something in the post today, and come back in 1 month and press submit and it would work.

Are you using the Standard Editor? UserCP -> Edit options -> Message editor. You should be.

Are you using preview? If you are using preview, then the images will be cached to your local browser upon preview. If you accidentally delete the image from the server after, it will still show on your browser because it is cached.

Mike

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Big Mike View Post
There is no timeout. You could upload something in the post today, and come back in 1 month and press submit and it would work.

Are you using the Standard Editor? UserCP -> Edit options -> Message editor. You should be.

Are you using preview? If you are using preview, then the images will be cached to your local browser upon preview. If you accidentally delete the image from the server after, it will still show on your browser because it is cached.

Mike

I copied this from the last post without "IMG" "/IMG" wrapped around it (I used quotes to avoid an Invalid Image

https://futures.io/attachment.php?attachmentid=152228

this will say the graphic does not exist.

I don't use any special editor...I enter the text and graphics into the window that I am currently typing into...I enter the graphics in the usual way using "Manage Attachments"....I have noticed once in a while in the past that if I partially created a post and entered graphics through "Manage Attachments" and walked away from my machine for a while because of an interruption without saving the message the up-loaded graphics which are embedded into the document disappear from Manage Attachments....that is why I suggest there is some kind of timing involved.

It is a mystery to me Mike.... in future for long posts I think I will compose the message in NotePad...copy and past it into the window....then up-load the graphics and embed them in the appropriate places....it will be much faster that way.

All I can think of to do.

oh yeah....under Edit options I have the default (at least I chose nothing it was pre-set) Standard Editor - Extra Formatting Controls

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 Big Mike 
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The method in which you type the post (notepad, word, Firefox, Chrome) should make no difference, I would recommend you just use your browser and not some third party app like Word or etc that will just introduce formatting problems. Modern browsers have spell check built-in.

As for the walking away and images disappearing, there is no reason that should happen and I don't think that is it. Feel free to prove me wrong, but there is no setting where any attachment "times out" or expires after being uploaded to the server.

I'm not aware of any error or problem or bug on the server side. Not to say it isn't possible, but we have over 250K attachments on the forum and this problem happens way less than 1% of the time. I've chalked it up to human error, accidentally hitting remove instead of embed, as they are next to each other.

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Big Mike View Post
The method in which you type the post (notepad, word, Firefox, Chrome) should make no difference, I would recommend you just use your browser and not some third party app like Word or etc that will just introduce formatting problems. Modern browsers have spell check built-in.

As for the walking away and images disappearing, there is no reason that should happen and I don't think that is it. Feel free to prove me wrong, but there is no setting where any attachment "times out" or expires after being uploaded to the server.

I'm not aware of any error or problem or bug on the server side. Not to say it isn't possible, but we have over 250K attachments on the forum and this problem happens way less than 1% of the time. I've chalked it up to human error, accidentally hitting remove instead of embed, as they are next to each other.

Mike

okay...let us say I start a message...upload a chart using Attachment Manager...I will take a screen shot to show it is uploaded.... I will also take a screen shot to show that the graphic is properly embedded into the in the message. The screen shots will include a time stamp from my computer.

Then I will wait for 30 mins and see if the image remains in Manage Attachments and take another screen shot

will that be proof??? It is all I can think of to do.

Jim

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this is a test post I am uploading a graph and embedding it into this message




All I did in the 3/4 of an hour was refresh my computer then take another screen shot

I will now upload the two screen shots





note the disappearance of the attached file in the message BUT not from the attachment manager...so I did not remove the file.

I will now preview the message and post it....



hmmmm...all attachments appear in the attach files

let us see if all graphics appear now

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  #242 (permalink)
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ok...all graphics show now.....let us see if they still do after 1 hour

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  #243 (permalink)
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Ok...I think I have proved the missing images are not a problem at my end as in my last post those images lasted for several hours before disappearing. In another post I made a screen shot of an edit of that post showing the images properly embedded in the document but no longer visible.

I will make only one more post today after trading has ended today showing the status of the portfolio at this week's end.

there has been a strong correction the last couple of days to bring us off the near record high for this portfolio....but the problems are not specifically related to a single stock...rather it is just a global correction so there is no reason to panic sell....in fact it becomes a buying opportunity.

From the look of it the TSX is following the DJIA slowly though curiously the TSXVenture index is not as affected...so far.

Gold is rebounding AGAIN in response the drop in the main indices....{sigh} just seems to be wandering like a rudderless boat

This weekend is a bank holiday in Canada so we get a long weekend......I will talk about Bollinger bands some time early next week.... TTFN

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 deaddog 
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Just so that you are aware. I looked at your test post last night a few minutes after you had posted and there were no images.

You then posted that you were going to wait an hour. On my end there were no images before you made the second post.

"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
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Just so that you are aware. I looked at your test post last night a few minutes after you had posted and there were no images.

You then posted that you were going to wait an hour. On my end there were no images before you made the second post.

I know it is weird...the images were there for 10 mins....they think perhaps I removed them but I didn't and I showed a screen shot in another thread that the image code for all images was in place but the images some how vanished.

But I think because of the new rollout they are going to do anything.

there is more discussion here if you are interested



Anyway I want to be past this and move on to my discussions on overlays and indicators that I use and how I use them.
I find it curious that it is irratic...sometimes the images are ok but other times not. I cannot do anything more as I have no access to the code...but even then I doubt I could do much as my computer skills have lapsed a bit from the days when I was a VB software tester/debugger...that was 15 years ago...but testing I was good at....if the code could break...I would find the way to do it

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well a major correction in North America markets for the last few days but we still scored a small profit for the week.



The $150 profit comes from the TD Bank quarterly dividend......every little bit helps

Have a good long weekend if you have one in your country...in Canada it is a bank holiday on Monday

have a good one.

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Bollinger bands, also known as BBs or Bollies which I well usefrom now on, were developed by John Bollinger in the 1980's as a way to measure volatility in a stocks price. Actually this overlay can be used on other indicators thought there are few charts commercial (especially free ones) that will allow you to use BBs on anything but price.

The calculation is very simple and is based on statistics (mean and standard deviation) though it is thought of as a pseudo statistical approach as the results usually assume a normal distribution (I will show a diagram of what I mean below) of values and especially in a breakout (up or down) the numbers are anything but a normal distribution in nature. But that criticism aside, this is one of the most useful overlays IMHO.

The Bollies consist a simple moving average SMA, typically of the past 20 averaging periods in the chart (20 days on a daily chart) from which the standard deviation is calculated. Then an upper and lower band is plotted from this data and usually it is +/- 2 standard deviation units. So you have an upper/lower/middle band the latter in reality is the SMA.

Normal Distribution





Here is what a normal distribution looks like...see the significance of what 2 standard deviation units means??? IF the data from which the average is calculated IS a normal distribution then +/-2SD units represents 95% of all values from which the SD was calculated...the other 5% are represented by the extremes at either end and would be called outliers. Now of course, in a bullish or bearish run this distribution curve would be anything but a normal distribution as the prices would be skewed high (a bull run) or low (a bear run ) however when the share price runs flat then the data gets closer and closer to normal.

But statistics be damned...it is still very useful as you will see. Here the bare bones stock chart with candle sticks and a Bollie overlay


Basic Bollie Chart




By itself the value of the bollies may see quite limited but there are nuggets to understand even here...however, as you will come to see, when combined with other indicators...(my choice is BBwidth, Slow Stochastics and MACD) this overlay and
these indicators become a very powerful tool for TA analysis.

My observations don't seem to jibe with what books on the subject discuss in the page or less they usually devote to this topic and often I disagree with their observations...but here are my deductions for what they are worth.

1. the biggest movements in the stock price occur when the upper and lower bollie are as tight as possible...the so-called "Bollie Squeeze"...this is the point where the volatility of the stock prices is the least.

2. By itself it is very difficult to determine the direction of a stock price movement inside and leading up to that Bollie Squeeze. But there are hints to help you out....only hints though....not buy/sell signals. Pay attention to the price movement when within the squeeze. Is the price above the middle band (20 daySMA)...Jan 1/14 and March 24/14 are good examples as the price is consistently above the 20daySMA prior to the bullish breakout a few days later whereas on May 1/14 you see the price drop below the 20daySMA this hints at the bear movement to come.....but it is not guaranteed as you can see on June 1-15...this hinted at a bull run...which happened when the bollies expanded but it was a head-fake and PLUNGED....WTF!!!

So you can see by itself Bollies can be a bit unreliable...but with help from other indicators you will see the reliability improve dramatically.

3. Note what happens when the share price rises above or below the upper or lower bollie. Remember earlier we said that data beyond the extremes of 2 standard deviation units were outliers...rareties.

Consider Feb 8...see how the break out went far above the upper bollie??? Again on Feb 21??? Apr 1-3...also June 14...what happens soon after? The share price pulls back until it re-enters the Bollie envelope....the bullish movement is a sideways slightly positive slope as in Fed 24 the worst is the neg decline on June 17....if you follow the chatroom BUZZ and you hear "time to back up the truck and load up" or " here comes a 2 bagger" but you see the price above the upper bollie...don't get excited...within 2-3 days (max 5 days) that stock will pull back...it still might be bullish afterward but by knowing and planning for the pullback you can usually buy it cheaper.

Consider May 9 to 20...see how the price dipped below the lower bollie??? note how each time the stock rose to re-enter that Bollie envelope...no charting book discusses this.

4. Notice what happens at the end of a bull or bear run....the stock price gravitates back to the 20daySMA...from there it is in consolidation rising and falling around the 20daySMA until the Bollies tighten again...when the next major movement will occur.

SO...while in this consolation period...is it a good time to make a purchase??? Of course, it will depend on your investing goals but once it reaches that 20daySMA don't expect much movement other than osscillating around the 20daySMA...I normally like to make my decisions when the bollies are tighter.


So! There are the observations that I make when looking at a Bollie chart with nothing else.

Would it not be nice if you could...

1. predict the timing of a breakout (bull or bear) more accurately using bollies?
2. predict the end of a bull or bear run?
3. recognize a head-fake movement with better accuracy...sometimes befor you bought in?

Well in the next few posts I well show how combining with specific indicators makes interpreting charts much easier. The next post will discuss Bollinger Band Width (BBwidth)

Hope you find this discussion interesting

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Posts: 934 since Feb 2014

As pointed out in the previous post, Bollinger Bands (Bollies) are useful by themselves in giving the chartist a visual representation of volatility. During the Bollie squeeze we can anticipate a major price movement but the timing and direction are difficult to predict using just the bollies.

Fortunately, there are indicators that when combined with the bollies make a much more reliable buy/sell signal.

The first indicator to discuss is directly related to Bollinger bands and that is the Bollinger Band Width (BBWidth)

One of the problems with the normal bollie chart is that it is hard to measure the exact moment that the bollie bands converge to the maximum and then diverge. This divergence when it is sudden and pronounced is the TRIGGER to a major movement. That is, it is the trigger that precipitates a buy/sell order.

BBwidth solves this problem. Here is its formula for calculation:

BBwidth = (upper BB - lower BB) / middle BB x 100

the division of the difference in upper and lower bollies by the middle band (the SMA of the bollie interval) is important as it sort of normalizes the result as we shall see in this updated chart from the previous post.





I have numbered several features of this updated chart for discussion

Buy/Sell breakouts

Notice that the Bollie squeeze looks tighter at Position 2 compared to Position 4 but when you look at the BBwidth at these positions you see they are pretty close in value. Also notice that major changes in price direction occur when the BBwidth reach a certain level...in this case about BBwidth = 5.0 as shown in the dot-dash line at Position 1.

this helps a lot in deciding when the sudden change in direction in the BBwidth will occur...ie: the trigger to buy/sell. Between those times that the BBwidth is above this level there could be a rise or fall in a relative slow change for the most part. One should pay attention to this stock if one is a long term player as it is here when major events take place.

Positions 2 and 3 show definite buy opportunities....see how abrupt and strong the BBwidth changes direction...this is the trigger you want to see for a BUY signal. Also note that the share price for the most part was over the middle band of the bollies.

Now look at Positions 4 and 6....there is a sharp change in direction of the BBwidth as well but look at the share price...in both cases there the share prices are dropping fast prior to the BBwidth signal....this is a definite SELL signal. I don't do any short selling, but I think this could be a good signal for shorting a stock.

Position 5 shows a head fake...it looked like a breakout rebound but see how muted that BBwidth response is. Other indicators may help us avoid this head fake. When you see this muted response of the BBwidth and you bought in in anticipation of a new bull run...then you should probably exit quickly even if you take a small loss.

Position 7 is similar but also notice we are high above the upper Bollie so that alone alerts you that this breakout should pull back...as it turns out it did and notice the more positive breakout signal a few days later.

How to anticipate the end of a bull/bear run

This last chart is getting crowded but you can look at it to see instances of the next discussion on BBwidth. Here is a new chart to check out.





I have shown 2 examples of swing buys/sell (green and grey) and 2 examples of a short/cover short (red and blue) scenarios

as you can see the Buys and Shorts are signaled by the sudden rise of the BBwidth and the Sells and cover shorts are signaled by the reversal of the BBwidth rise.

You could say....well yeah I could see that from just the chart...and I guess you could but this gives a more objective view...

Can we make these buy/sell signals more clear....yep...by the addition of 2 more indicators to this chart

The next discussion later this week is the addition of Slow Stochastics indicator.

Good trading.....

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  #249 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well it has been a short week as Monday the Canadian markets were closed for a bank holiday.





Well we made $5 so far but considering the downturn in the past week of so...I'll take it. Gold appears to be coming back AGAIN....{such a tart!!} so LSG.TO is increasing nicely but I won't get excited til Gold exceeds $1325/oz and keeps on rising...but it seems to be falling back after short gains...luckily (so far) LSG is holding its price pretty good on these gold pullbacks.

I am considering placing a trailing limited stop loss on Lundin metals LUN.TO ...very close to doing so but really would like 20% and we are getting near there with 16.59%...otherwise I am pretty content...

I am working on that discussion on how I use MACD and about 1/2 finished....I will post it later this evening.

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 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

MACD was developed in the late 1970's and is one of the most popular indicators used today.

The main MACD line is simply the subtraction of 2 exponential moving averages and these are traditionally the 26 period EMA and 12 period EMA. I say period as the MACD indicator can have any period interval you want... minute, hour, day or week.... it does not manner...so if we were using a daily time period the fomula would be:

MACD = 26dayEMA - 12 dayEMA

traditionally a signal line wanders above and below this line and is used to generate buy/sell signals. This signal line is usually a 9 period EMA or for a daily chart it would be a 9dayEMA.

I am not a great fan of using a signal line in daily charts I find that the signals they give are too late. I would much rather trend the MACD line and forget about the signal line all together. In intra-day charts though, where you are using shorter time periods of 1,2,5,15 min time intervals then I do think that a signal line might help but I still would like to trend the main signal.

The following is showing a chart with the normal MACD below then followed by a MACD with no signal line but trended and finally a naked MACD chart





As you can see, Bonavista was in a bullish uptrend until May when it changed into a bearish down turn.

the vertical lines are indications of a buy (green) and sell (red) signals. Perhaps a short term swing trader can make money out of the plethora of buy/sell signals but if I was more into trend lines the pink and light blue resistance/support lines gives me as much or more information that the 9dayEMA line oscillating around the MACD....by those trend lines in the main chart one could buy on Nov 13/13 ($11.60) and held the stock til May 10/14 ($16.60)....a nice $5 gain per share.

If I trended the MACD I would buy a little earlier, I would hold the stock because the MACD is moving sideways and sold it also on May 13/14....I might pick it up again on May 27 when it crossed the MACD resistance line (around $16) but sold it soon after on June 24 (around $16)...the jury is out right now.

Is the signal at the far right (dotted green) a buy signal given in the traditional MACD about to happen?? Well trending the peaks shows it still following the narrow channel so it is a watch by that chart.

I don't like all the buy/sell's generated by normal MACD ... I find it much easier to just trend the MACD

However the use of MACD is very much more enhanced when it is combined with Bollinger Bands and the BBWidth indicator as shown below:





this charts make the decisions easier....

The buy or sell signals are timed ONLY to situations where the BBwidth is diverging rapidly....the decision to BUY or to SELL depends on what direction the MACD is trending at the time.

The Blue lines are showing the end-of-a run...this is a place where as a swing player you might take a profit but for a long term player this is a WATCH point. You are usually making this observation beween Bollie squeeze events and this is a consolidation period following a bullish rise or bearish fall.

The trigger for this "hold" occurs when (for a bull run) the BBWIDTH changes from a pos to neg slope and the MACD changes from a pos to neg slope at the same time....if one makes the change but the other does not, the run could still continue...BOTH CHANGES must occur.

the dotted green line shows a false buy (head fake)...see how muted the BBWidth rise is this gives a clue things are not going to continue

The coral circle is very interesting. The end of a bearish run is also triggered by a reversal of a BBwidth chart which did happened on about July 23 or so....but the MACD instead of rising has gone sideways. When this happens it casts doubt that a stock has reached a bottom....it suggests the stock is just resting and further losses may happen yet...it is not clear at all as to the direction.

Consider this chart





In this chart on the left you see a clear sign that the bearish fall found a bottom...I call this a "MACD/BBW pinch" see the BBwidth clearly reverses...the MACD mildly reverses and then shoots upward.

In the example on the right...the BBWIDTH does not go neg ... it moves sideways...the MACD then shows its true colors and heads down again...there are morse losses to come.

The buy/hold/sell sell signals are clearly shown here.

There is one more problem to solve....at the end of a run (blue) line....How do I know if I should sell out or continue to hold before reaching the BB squeeze???



Well that is where our final indicator fits into this chart....the Slow Stochastics oscillator and that will be the next topic.

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  #251 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

here is a chart of gold for the past 24hrs at 5min intervals




I think it will drop at the bell if the price of gold falters....I have about $1800 in my phantom portfolio here so I will say that I want to buy 1000 shares of LSG.TO at tentatively the Ask bid which is $1.37 but if it falters at the bell I would enter a market order for 1000shares and take it at whatever lower price I can get.

So I will enter a limit buy order for Lakeshore Gold Corp @ $1.37 for 1000 shares at the bell if the price rises from this price...otherwise I will enter a market order for the same number of shares at the bell if the price were lower.

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  #252 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well I did in real life as I said I would do in the previous post and bought into LSG.TO. So I picked up 1000 shares for my phantom portfolio @ $1.34

I am happy as the shares rebounded to $1.39 so far....hope the rest of the day goes as well.

Good Trading!

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  #253 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well so much for the excitement over gold...it fell back so of course the price of LSG.TO lost ground as well...the only saving grace was I got it cheaper than the $1.37 I was first looking at.

we lost money on the week but nothing serious...after I finish the last of my posts on that chart I have developed I will use the chart to analyze each of the holdings as to what stage they are in .

anyway here is the status as of the close today, Aug 8


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  #254 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well again, I find this indicator to be very useful but I doen't use it in the traditional sense. The problem with most textbooks on charting in my opinion is that they focus on the indicators as though they can do all the work with respect to picking a stock. There is a tendency to try to fit all situations into the interpretation of the indicator. The fact is that indicators will always give you dodgy information if you use them in this manner...sometimes they outright lie.

When I first started my journey 20 years ago as a chartist, I fell into all those indicator traps and became quite disappointed. But then accidentally I noticed that Bollinger Bands gave pretty good indications of a major price movement....then I found that the BBWidth helped by more easily displaying the convergence/divergence of the BB upper and lower bands....It was at that point that I decided to experiment with adding other indicators and seeing how they responded when these critical BB squeeze events occurred....the first one I found useful was the MACD as I described previously.

However, it did not give me a complete picture. I needed another confirmation indicator for the trigger to buy and sell....but also I wanted an indicator that would help me decide whether to continue to hold a stock even though the BBwidth and MACD showed that the run (bear or bull) had ended. I did not want to sell if there was a chance that the run would continue on a bull run and I did not want to re-enter a stock on a bear run until I was certain the bottom for that run was reasonably certain.

I tried to find the proper third indicator for my chart....It was like a hockey coach trying to find a third member of a hockey line, you have the center, the right winger and now you need the left winger. the three hockey players have to work smoothly together. You need the sniper, the play maker and the grinder (the guy who digs the puck out of the corners). How often do you find in hockey a great center but one or the other wingers doesn't work well with him. {as a Canadian, a hockey analogy comes easy to me }

After lots of trial and error I discovered Stochastics.

Stochastics is a oscillating momentum indicator developed by George Lane in the 1950's using the highest and lowest share price in a given period of time (the look-back) and relate it to the current share price. The basic calculation is as follows (taken from Stockcharts.com stockschool - one of the best website for indicator information IHMO)

Stochastic Oscillator [ChartSchool]


Quoting 
%K = (Current Close - Lowest Low)/(Highest High - Lowest Low) * 100
%D = 3-day SMA of %K

Lowest Low = lowest low for the look-back period
Highest High = highest high for the look-back period
%K is multiplied by 100 to move the decimal point two places

the following chart looks at various forms of this indicator





The default look-back period for the %K factor is 14 days. As you can see there is little difference between the Slow Sto at 14 or 30 day look-back but the curves for the 30 day are to me smoother and easier to read. The Fast Sto with even a 30 day look-back has a very choppy look though the general resulting curve is similar.

As a long term trader, I don't want to see every twist/turn...fast response is not a concern to me...the signal line does not enter into my basic view of the indicator...it is the trend of the %K that is interesting.

As an oscillator the chart moves between 0 - 100 with over 80 being thought of as over bought (bearish) and under 20 as over sold (bullish)...I find this to be NONSENSE ....

you can see this from the above chart..from Feb to the end of April the Slow Sto has been in so called overbought territory...If you sold the stock in mid Feb because the Slow Sto entered this "overbought" territory you would have missed out on $3 worth of gains

Similarly...if you bought this stock on July 7 because it was "oversold" you would have lost $2.25 and counting since then.

To my way of thinking....Entering a level above 80 is VERY BULLISH and will remain so until it falls out of this zone and even then it is only MILDLY BEARISH (as it easily can rebound and re-enter that zone)until it falls to 50. Similarly entering a level below 20 is full on BEARISH as long as it stays below that level and is only MILDLY BULLISH (it can fall back easily) as it rises above this level until it reaches 50.

I apply this way of thinking to any oscillating indicator between 0-100.





Whoa....look at all the things to talk about when you add the Slow Stochastics to this chart.

On the left is a nice run that was in 2 stages...if we went strictly on the start of the run and end of the run according to BBwidth and MACD we would have started on Feb 20 (1) and ended on about March 10, jumped in again at April 3 (3) and ended at April 28 (4)...we would have followed the rise but missed out on the gains from March 10-April 3 and incurred the cost of 2 extra commission fees.

But look at the Slow Sto (3)....it stayed above or near 80 from Feb 10 - Apr 28....this showed a stock that was still bullish even as the MACD and BBwidth was declining.

between (4) to (6) we see several movements of the three indicators...the fall of the Slow Sto and MACD combined with the rise in BBwidth is a bearish situation at May 4...at June 12 the BBwidth and Slow stow are rising but the MACD is sideways ( a warning things are not as good as the price movement appears..

Now we come to the middle circle...at (5) note the strong decline in the Slow Sto and MACD and then the sudden rise in the BBwidth...a powerful Sell signal (or in this case - forget about buying....or if I was a person who played "shorts" it would be a time to initiate a short sell)

NOW we come to the last circle....remember the previous post the concept of a MACD/BBWidth squeeze...the BBwidth is completed its reversal but the MACD seems to be going sideways....Look at the Slow Stochastic...it is staying below 20 the whole time. - This means this is not a bottom....there are still more losses to come. Therefore it is best to not jump back in early ... rather it is prudent to wait for the BB's to converge again and the BBwidth to fall to about a value of 5 again...eyeballing the BBwidth I would say that will occur in 5-10 days. So position (8) is still a bear.

I hope you can see how these indicators work well together.

Here are the basic rules:

1. A buy signal occurs when the BBwidth AND the MACD AND the Slow Sto are simultaneously in a positive slope AND the trigger is the BBWidth sudden and strong movement.

2. A signal signal occurs when the BBwidth has a positive slope and the MACD AND the Slow Sto has a negative slope simultaneously in a positive slope AND the trigger is the BBWidth sudden and strong movement.

3. The end of a bull run occurs when there is a reversal of slopes to the negative simultaneously of all three indicators and the Slow Sto is less than 80

4. The end of a bear run occurs when there is a reversal of slopes to the negative for BBwidth and to the positive of MACD and Slow Sto simultaneously and the Slow Sto is above 20.

these rules are not cast in concrete (that is why I use 2 -3 other charts .... but using this chart alone (in my unbiased opinion) will help you immensely in evaluating charts for long term trades...it may even help in intra-day trades but I have not tested this as extensively.

In my next post I will take the stocks in my phantom portfolio and see how they currently stand using the chart that we have developed.

Good trading....

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  #255 (permalink)
 ratfink 
Birmingham UK
 
Experience: Intermediate
Platform: NinjaTrader
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...sometimes they outright lie.

Yes, and that word 'sometimes' is the key that really makes their conventional use pointless. I don't use any of them but that's a really good post, thanks. If I ever get time I may have to write something to keep an eye on some of them for me, along the lines you describe. Do you do any system backtesting of this approach or is it all eyeballed?

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  #256 (permalink)
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Calgary Alberta/Canada
 
 
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ratfink View Post

Yes, and that word 'sometimes' is the key that really makes their conventional use pointless. I don't use any of them but that's a really good post, thanks. If I ever get time I may have to write something to keep an eye on some of them for me, along the lines you describe. Do you do any system backtesting of this approach or is it all eyeballed?

I do not have any tools for back testing other than doing it manually, I also have no tools for using these concepts automatically.

I do have about 4-5 years experience using this chart that I have shown and I have not once found anything that created a problem for me and my interpretation of this chart. I have literally done hundreds of readings on other websites under pseudonyms of Naamplao or Underexposed and especially on Yahoo Answers

https://ca.answers.yahoo.com/dir/index?sid=396545322

under my name "Underexposed" I am the top person in Canada for investment answers (actually that probably speaks more to the number of Canadians answering the questions). Initially I had a lot of grief and derision from those that believed that what I did was nonsense but I prevailed and won grudging respect from participants around the world....if they tried to belittle my approach I would challenge them to predict was would happen in the near future and then I would give a complete reading (4 charts) and make my prediction and 9x out of 10 I was spot on...

My best answers (not always price predictions) at 2090 also ranks in the top 10 on the American version

https://answers.yahoo.com/dir/index?sid=396545322

I don't appear there....though we all answer the same questions and only one answer is the "best"....because I am Canadian not American....each domain of Yahoo has a listing of the best for that domain.

So...not to toot my horn too loud... my method of chart reading has survived about a 4-5 year test though I rarely go to Yahoo much anymore....their latest roll-out was buggier than heck. I found this place and I like the quality of people here and the ability to create a journal to discuss what I do....I am still active a little bit as "Naamplao" and can be found on this site

Canadian Stocks Message Boards

I do enjoy commenting on stock prices and giving readings using my charts...though frankly no one has really asked me to do so here...mainly I suppose most are not long term or long swing traders...I doubt my approach works for options or futures...I think it could be applied to intra-day trading though.

So to answer your question (why is he sooooo long winded in his answers?? ) no I have not done back testing because of not having the tools to perform it...I would expect I would need a service for data to do it efficiently for a massive test...however, I could do selected stocks from historical data downloads. I do have computer programming skills but they are rusty having been out of that business for 15 years or so.

My validation is simply anecdotal from about 5 years of doing the analysis of company stock performance... combined with the other equally useful charts that I have developed but not discussed here in detail.

I have no problem working with you though...if you think it is worth pursuing.

As always thanks

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  #257 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Ok...now let's really use this chart.
@ratfink asked me if I have back tested my approach and I said no as I had no tools to do so....but then I thought about it...I do have some "rules" that might lend themselves to developing a program around to automate things but As you will see there are just too many nuances that I see when I evaluate a chart to do a complete reading....so I guess my approach overall falls under "eyeballing" as termed by Ratfink. I think those "rules" might be used in some kind of screener...I should try that out for American stocks using "StockFetcher"

https://www.stockfetcher.com/ui2/index.php

This is an excellent website where you can use a relatively simple, "like English" query language. You can try it for free on historical data or on real data if you subscribe...and I would subscribe but they don't do Canadian stocks {sigh}.

To me, stock analysis is a mystery puzzle and you must collect the clues before you finger the culprit. It is not the case of a single indicator or set of circumstances that solves the mystery.

So...let us look at the state of the first stock in this phantom portfolio and look at the past and predict the short term future.


Lundin Mining Corp [TSX:LUN]



this is a very interesting chart with lots of variety.

(1) this is a classic Sell signal....see how the MACD was neg for a long time and kept going neg....the Slow Sto finally deccided to fall out of the "overbought" area in a serious way...the BBwith now rises....Boom .... the sell trigger is pulled

(2) this is a classic Buy signal....note the rise of the Slow Sto and MACD while the BBwidth goes lower...the BBwidth reverses and goes positive...Boom the Buy trigger is fired.

(3) is interesting....see how the share price falls to the middle band...bounces of to rise to the upper BB....falls back to the middle band....repeat...repeat....Am I worried?....nopes!...look at the Slow Sto (near over bought) and MACD...a bit choppy but both are basically drifting sideways. It is really hard to predict the end-of -that-run where consolidation comes in .

(4) however, here it is a definite sign to exit the position if you so desire as the Slow Sto and MACD are definitely and the BBwidth rises....however if you were slow to sell....don't worry....see how the BBwidth is quite muted, going sideways so if I saw that I would wait and see what developed...

(5) no clear bottom indication, but suddenly the MACD and Slow Sto reverse direction and go positive a couple of days this is confirmed by a dramatic rise in the BBwidth....Boom...a trigger to HOLD, or BUY or simply add to existing holdings.

(6) I did not draw it but July 16 is a classic end-of-run indication...see how the MACD, SLow Sto AND BBwidth go neg at once??? Typically at the end of a run...the share price returns to the middle band (very normal consolidation)

(7) SO...now we are in a BBWidth tunnel that is pretty tight and rising slightly (slight BB divergence)...

What is the prediction Bull or Bear???

a) is the Slow Sto falling??? No...it is staying near the edge of the "Overbought zone" ......neutrally bullish (neutral as going sideways)

b) Is the MACD falling??? Yes...very slightly with lower lows....mildly bearish

c) the BBwidth is not tipping its hand yet.

If this is all I had to work with...I would hold as it is not clear as to direction...adding the two indicators indicate a very slight bear bias...but it is straggling the middle band. In real life I would consult my other charts to see if I could draw a better consensus...but using this chart alone...it would be a hold/watch at this point....

Good trading....

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  #258 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Every stock chart has a different story to tell. To me it is not mechanical, thought there are basic mechanical elements to the analysis. You still have to use your investigative skills in the final analysis...piece the puzzle together.

Lakeshore stock is heavily influenced by the price of gold...Gold surges...LSG surges....Gold falls...LSG falls a little bit. Lakeshore Gold corp is a mine that seems to have solved its problems...but you don't find that out by looking at a chart....it is information you glean by investigating the fundamentals of the company. I am a great fan of learning something about fundamentals to augment my technical analysis....the us versus them attitude by many investors is stupid to my mind both types of analysis offers clues to the future price movement.

but this is a post to show the analysis of Lakeshore Gold Corp stock using the chart we developed so let's get on with it.





(1) A classic sell signal....falling Slow Sto and MACD... BBWidth suddenly rises...Boom goes the trigger.

(2) Similarly a classic buy signal...rising Slow Sto and MACD... BBWidth suddenly rises...Boom goes the trigger.

(3) this is very interesting...you see 2 signals of a bottom...a double bottom in the price movement. the signal on the left is clearer than the one on the right but both are there. I am sure there is merit in this for judging the end of shorts though I do-not-shot-stocks

You might say..."Well if it is a bottom, should not this be a buy sign?" Not necessarily, it might be just a rest and the stock will fall again in a week or so. However, from a swing play point of view, notice that when a stock has a volume it usually heads back to the middle bollinger band...and sometimes beyond. I am thinking about using such signs for a short term swing...but I don't do that yet.....

Finding a double bottom is usually bullish...hence you see the buy signal at (2) soon after.

(4) I have not drawn every line but you can see a couple of end-of-runs in the range represented by this "4" circle...they happen at June 23 and July 21 where the BBwidth and MACD reverses direction....Why don't I sell???? Because the Slow Sto remains bullish....so you hold and ride the wave.

Note that at this end-of-run point the stock also gravitates to the middle band....this is natural and not disturbing because the Slow Sto still looks fine.

(5) SO....What is the prediction for the future

Well it looked like another breakout was occuring....in fact if you notice last Thursday post I jumped in and did something I don't normally do...I-made-a-market transaction to add 1000 shares of LSG.TO

Was that a mistake? Well no....there was a pullback which I did anticipate...I did not pay $1.37...I got in at $1.34. The price was quite high above the upper BB at the time...it could have rocketed off for a couple of days but eventually it would be pulled back into the BB envelope. The signs looked good (rising MACD and the BBwidth trigger and Slow Sto over 80 but it pulled back and the MACD and BBWidth look quite muted now.

The reason??? It was because the price of gold fell back.

Prediction:

It still looks like the beginning of another run to me, though in truth it could be a head-fake. It all depends on the price of gold.





it seems that the hourly chart is not going to be bad today...but is that the ending to a head and shoulders formation coming....yikes I hope not!. I don't reall believe in that formation but could happen ...gold is so fickle... I hate it really...the world is going crazy and it bobs like a cork.

at this point though despite the muted MACD and BBwidth....it is a hold/watch with a possible buy if it takes off. But my portfolio on this site is out of available money....so it is a hold for me.

I will post another analysis tonight

Good trading.....

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  #259 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Ok...I lied...Here is another post...I had some free time and this chart is too easy to read so I did in in a few minutes.





I wish all my picks were as easy as this one. In real life I got it first back in late March where that Buy signal occurred. I was looking for a high dividend stock ($0.115/month) with capital gain potential... and it performed well on both counts and I have added to my holding several times....I added this stock to my phantom portfolio here near to that Buy signal in July.

There really is not much to talk here..a blind man could see this is a good stock

(1) These are both classic Buy signals...led by the Slow Sto / MACD triggered by the BBwidth jump.

the only thing to comment on is that during the first 3 months of that run the stock was in that tight envelope but it never closed below the middle band. While the Slow Sto did drop on May 6...the MACD was rising so this was not compatible with an end-of run signal (both MACD AND Slow STO must have a neg slope when the BBWidth turns positive).

You might consider the sideways movement in late June to mid July as an end of run but really it is just consolidation... then boom, another run is triggered

(2) Note prior to the "2" line...the share price was above the upper Bollie but after 4 days, it re-entered the BB envelope. That was to be expected as it generally stays out there for 5 days max...But it came in in the best possible way ... sideways with a positive drift.

Now look at the indicators where the purple "2" line crosses them. With that long shadow downward it might look like an end of run coming. The Slow Sto looks like it wants to cross the 80 line ... the MACD and BBWidth have flattened out.

HOWEVER the MACD and BBWidth did not turn negative...and the share price caught a second wind.

WAIT FOR THE COMPLETION OF THE END-OF-RUN SIGNAL.... You might lose a little gains if it does complete that signal but you'd kick yourself when it takes off again...as it did here.

(3) Prediction

Well, the stock the stock does not show signs of slowing down...I would have to look at how high it may go but right now it would take a heck of a dive to make me sell this puppy. I can see support at $29.50 and solid support at about $27.80

It would be a huge Hold for me and collect those monthly dividends.

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  #260 (permalink)
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I have thought even more about what @ratfink has asked me. Do I "eyeball" the chart when I do an analysis?

I have done literally hundreds, if not thousands, of these type of readings over the past 5 years, that I have spent developing these specific charts and beyond that when I first started charting. I now have 4 charts that I constantly use...they all add a piece to the puzzle. I have only really detailed the "buy/sell" trigger chart. It is effortless for me to read them and on most charts it takes 5 mins or less to come to a conclusion.

I don't really think about what I am doing as it is automatic to me. Many people ask me why I do these readings. I do it for four reasons:

1. I like helping other investors...especially the newbie who has the best intents but is listening to bad advice and has not developed a plan.

2. When I answer queries from others I get exposed to stocks that I would never have considered and somethings the questioner brings a real gem to the table and we both can profit from it.

3. To sharpen my game.... many here may know Dr. Ruth... she had a great saying that applied to her profession ... "Practice...Practice...Practise...!!!!" I can still see her with her cackling German accent ... well it applies to being a chartist. When you practice by yourself you don't think of everything...when others present problems to you, then you are confronted by a variety of situations and it makes the practice more fun...not Dr. Ruth fun maybe but it occassionally can be orgasmic

4. There is an expression that "you learn more when you teach".

I found that certainly when I did a stint teaching English as a Second Language. We don't think much about the mechanics of speaking/listening/writing/speaking English. After all we have been doing it for decades...but just try to explain why. "The sick old black tabby cat" is better English than "The black tabby old sick cat"...most of us would say that the former "sounds" better than the latter...but there is a rule. It is only by teaching the subject that you investigate further but sadly English is not a very rule based language {sigh}

Well @ratfink caused me to think even more on the subject of my TA. We try to boil down stock picking to thinking that all stocks act alike...but that is not true...it depends on the sector, maturity of the stock and influences (eg. a price of a commodity)...I think that a stock may have a signature to its price changes but they won't be the same as others. Hence the difficulty devising a perfect software...So I must say that my approach to picking a stock is very much "eyeballing", though I will use basic patterns and tools to help narrow down choices.

Analysis of Toronto Dominion Bank [TSX:TD]

That is my sermon for the day Now let us look at TD



This is another pretty easy stock to read. As a general comment, investors basically like this stock....look at the Slow Sto and with only 2 events in 6 months it hovers around the value of 80 and even the drops have not passed 50.

Personally I have held this stock for a long while in my real holdings...I am going on my 8th month, holding (and adding frankly). This phantom portfolio is working on about 6 months.....there are several points to make though in this chart:

(1) This is a classic BUY SIGNAL that is hopefully obvious by now...but if you already held the stock it is a definite signal to add more stock to your holding...that kind of signal is not a portent of the weak.... quite the opposite.

Note how the share price was above the upper BB for 5 days (the usual maximum) before re-entering the bollie envelope...then it resumed climbing...nothing in the indicators suggest an end to the run

(2) Note the reversal of trend to the indicators....this is a sign of the end of this run...and you could sell and take your swing....personally though I would wait til the next bollie squeeze before making that decision...it is just too good a stock to abandon..it would be a hold for me there

(3) another sign of the end of the run....this time much stronger and I would not blame anyone from taking profits from the extended run

(4) But this is where I pondered Ratfink's comments again and studied the times this stock ended previous runs and you see them circled in Green. See how they fell just below the middle band (which is a natural thing after falling from a run ending position) then approached the 50daySMA and rebounded....I would investigate my other charts and see if this is a TD bank problem or a general banking malaise...then I would hold (as I have done in my phantom and real portfolios)

(5) Prediction

Well as I thought it would it rebounded in price...you can see the BBwidth is falling and the MACD and Slow Sto is showing signs of rising again... But the stock is in consolidation right now...there will be NO major price shift for a couple of weeks (end of August maybe), since the BBwidth has to fall to about 2.

It is a HOLD/WATCH ...until the BB squeeze happens...if it goes bearish...perhaps it would be time to move on and take profits...cannot be predicted at this point.

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 ratfink 
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Language is far more powerful than logic, whether verbal or visual, for two reasons, framing and secondly because the purpose of recognition is not to recognise things but to infer something about something else. You are a great example of the human brain doing what it does best - using heuristics that computers still haven't approached.

Why can I say this? Because I have just set up a thirty (!) year old Thorens vinyl deck, playing Soft Machine's Third album Slightly All The Time after half a bottle of vodka and making the missus and two cats happy.

Thanks for the posts, TA being done as TA, whatever next?

p.s. you have no idea how many times I had to retype the misspellings in this, I blame the cats.

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Hahaha...so you are a cat lover as well as myself. I don't have one right now as I live by myself and travel a bit so it is tough to have to find someone to look after the cat.

One of my other pseudonyms is Lynxear as you may know reading my poetry in the "OFF TOPIC" forum. I love the Lynx and its ears are characteristic of this Canadian wildcat...I think they are also in Russia as well.

Anyway...Glad you like the posts and thanks for the feedback.

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I would have needed a lot of help from my other tools (charts) if I had found this stock 5 months ago. Would I have had such a problem 9 months ago? Not so much and I will explain why in a bit. Do I have a problem now? absolutely not!!

So lets begin





(1) I have circled a rather wide area here as there is stuff to talk about.

First of all the Slow Sto before the gap gave us a clear message that investors were in love with the stock... (over bought sell signal Phhhttttttt!!!!)...the MACD and BBwidth gave absolutely no clue as to when the gap would happen, both were dead-assed neutral, a carpenter's dream (flat as a board and never been nailed) neutral. And then such a strong response...absolutely ...no-doubt-about-it BUY signal.

(2) I want to point out this Candlestick hammer...this marvelous bullish candle.

Candlesticks are really a short term swing traders tool...day traders too. I use them in this chart but I don't use them for what they are designed for. I use them to judge resistance and support levels in 90% of the time. The are supposed to help you decide the price tomorrow...long term traders don't really care about tomorrow so much.

Why? because all candlestick patterns are 3 or rarely 4 candlesticks and the previous candlesticks are not considered at all, and even then every book I have read on the subject (Steve Nison is the guru on the subject) tell you that you can make a prediction but wait for the next candlestick to confirm it.

People who are introduced to candlesticks are bombarded with patterns to memorize . To my way of thinking this is not what you should do...YOU HAVE TO UNDERSTAND THE STRUGGLE that is going on in that candlestick. Then you know something.

This is not a perfect hammer as there is a shadow on top but that shadow is very small compared to the one below.

this is how I imagined the struggle...the opening price is the bottom of the main body at about $3.15 but during the trading day the buyers beat down the price to about $2.55 when the sellers won and gradually forced the price upward to about $3.25 and it settled back to $3.20... that is an amazing fight...a day trader would have made good coin on that day. That kind of struggle in my opinion does not pullback easily....it is not as if the price just jumped up and stayed there.

(3) This action here breaks my rules. Most of the time...90+% the Slow Sto leads any rise or fall...then comes the MACD and finally the BBwidth becomes the trigger....well that did not happen here...the BBwidth lead the way then the Slow Sto and finally the MACD...that would have puzzled me back in May.

(4) however, I found this stock towards the end of June and by then the pattern was clear...the price staying above the middle BB, Slow Sto above or near 80, MACD and BBwidth are basically fact.

Prediction

It has been due for a major movement for a month now...it could happen any time but right now I think it will march along this current path for a while...the time for a warning is a drop in the Slow Sto below 50 and a MACD that goes definitely negative.

I would stand pat and HOLD until I see the next indication of a change in the indicators...not much bad here...other charts may help but that is not the issue here.

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 ratfink 
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People who are introduced to candlesticks are bombarded with patterns to memorize . To my way of thinking this is not what you should do...YOU HAVE TO UNDERSTAND THE STRUGGLE that is going on in that candlestick. Then you know something.

Great description.

Also a perfect follow up to my point last night about recognition being for inference rather than recognising things. i.e. it's really re-cognition ...

Of course that understanding comes with big clues for what the wave pattern and profile inside it might look like too, and that's the sort of brain heuristics we take for granted all the time.

p.s. regarding the cats, I do like them but these are a pair of Polish rentals, they should have gone home last week but step-son's mostly smart blonde girlfriend didn't get the injections done in time for their holiday trip. I've had previous wives of cat, dog or horse flavour, although my current fiancťe is neutral, could happily stroke them or shave them.

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When a stock reaches the end of a run (bullish or bearish) the price usually gravitates to the middle band of the Bollies (usually the 20dayMA in a daily chart). This is usually called the "consolidation period".

Now it can arrive at that point 3 ways:

a) The best is when the stock has a slight positive rise as it travels its way AND the Slow Sto remains in the "HATED" over-bought range...(oh yeah!{sarcasim} you MUST follow what books say when they say to sell in over-bought situations...NOT!!!).

Remember... when a price is in the over-bought zone it is bullish, investors like it...even falling out of this zone is mildly bullish as it can easily reverse and return back there.

b) Next best is is to travel sideways and have the 20dayMA catch up to it. (Slow Sto still around 80)

c) The one to be careful about is during the consolidation the share price falls dramatically toward the 20daySMA and the Slow Sto has a negative slope as it REACHES for that 20daySMA. It is still a natural event (ie. finding the 20daySMA) but it shows a falling interest in the stock...you see this often in stocks that have been in a PUMP/DUMP scenario...(no PUMP/DUMP stock rises or goes sideways in consolidation).

The situation is not full-on bearish just mildly so...it could still recover as the bollies tighten but the odds are not that good and you would be giving up a lot of the gains you made in the last run.

So now lets look at the chart for EnerCare Inc. [ECI:TSX]




Another nice chart which is not hard to interpret.

(1) Look at that stepping stone staircase of Buy signals.... the one at the far right is interesting. It did look like this would have been a sell signal...the share price was falling as was the Slow Sto and MACD....however note how the BBWidth stayed flat...the BBWidth is the trigger....if the trigger moment happened and the Slow Sto and MACD continued negative...then it would be a classic sell signal...but that did not happen...the MACD and SlowSto reversed direction to make it a BUY signal....

You can anticipate the bad things but don't act on it until you see everything...wait for the trigger when BBwidth is at its lowest.

(2) this is the end of the run obviously but you would be foolish to sell at this point. The consolidation is progressing well and the Slow Sto remains over 80... it is not a buy at this point as anything can happen in consolidation... it is a hold until the BBWidth falls back to about 5, ie: when the bb's converge to the maximum....at (2) it is a way too early to make that decision...though things look fine.

(3) Prediction

It is still a hold at this point...look at that BBwidth...it will not get critical til it reaches 5 and that will happen in about 3 trading days, though it may stay at 5 for who knows how long. The MACD is falling and that is normal...the Slow Sto is still over 80 and that is looking fine.

It is a definite hold just sit back and collect the dividends and wait for a decision to buy more or sell...at this point the buy more option looks good....but wait for that trigger

good trading......

PS: cats are very calming to pet and don't demand attention. Dogs and I would guess horses are also soothing but they need you almost 24/7

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  #266 (permalink)
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I don't always show Resistance/Support in a chart like this...probably because I cannot do it directly in a free version of stockcharts.com. I do use P&F charts to show R/S and the trend lines I show here are there...or at least they are easy to see there.

but I jump ahead of myself....here is the chart



Lots of stuff to talk about here

(1) This had all the marks of a price drop of major significance...but it did not happen....was there a clue??? yes, look how weak the BBWidth...it was a mere blip...that was your clue this was a short - head fake.

(2) then the real move was shown a couple of days later. Led by the Slow sto and followed by a stronger MACD and BBWidth it moved....but you might have thought...{merde...I missed it} no...see how high it was over the upper BB...it should pull back and it did.

(3) Is this point a Sell or Hold?? Well it depends if you are looking for a small swing or more money. Let's say you picked it up for $7.50 and sold it for $7.80 (30 cent gain ...about 5%) that is decent I suppose....but there is more money potential.

The Stock is in consolidation now...it moved to the middle band and bounced higher and moving sideways to it....Notice the Slow Sto and MACD...especially the Slow Sto....so tight to the 80 line...both fell a bit and true to form the slow sto leads the way...then the MACD then a decent trigger at (4) to add to your holdings if you wanted too.

(5) months go on we are following a diagonal support...the Slow Sto is great til June then falters a bit...no trigger in the BBwidth...all is fine....Now by July it tries for what soon will be shown as a resistance at about $8.25...it tries 2x more as the triangle tightens and the BBwidth keeps ratcheting lower.

(6) Prediction

this breakthrough could happen any time now...If I looked at other charts I am sure I would see confirmation of a bullish breakout...the Slow Sto looks to be rising a hint in the MACD...and the BBwidth is quiet as a mouse...BUT WAIT FOR THE TRIGGER...that is a strong resistance and it could deny the breakout.

It is a HOLD at this point....but I would be looking around to see if I had extra money to add shares if it breaks out which I am 90% sure it will.

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We are having a good week as shown below



We are headed to break the record for this portfolio of 8.36% back in mid April.

Not surprising really if you have been following the posts recently on individual stocks...It looks like I finally assembled mostly winners following that restructuring of the portfolio back at the end of June.

Still one more stock to go in that analysis and that is KLS.TO - Kelso Technologies...I saved the worst performer for last I think it will be an interesting post as I appear to disregard my TA rules on that one. Well, yes I did...but for a damn good reason and I will discuss this in detail tomorrow.

Good trading.....

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A lot of chartists will not consider any fundamentals. They believe that everything is revealed in the chart movements themselves. I used to think that too early in my career as a trader.

I thought of it this way.... I would like to consult every person who was holding the stock or was thinking about holding that stock for their opinion as to whether to buy/hold/sell. Obviously that is not physically possible but to a certain extent that is what charting is. Analysis of a chart shows you the sentiment at whatever period of time you want...when the people feel bullish the stock price rises...when the sentiment turns bear it falls...a chart would seem to be a perfect summary of how people feel.

I have come to the conclusion now that I am a more mature trader that there is something to understanding the fundamentals of a company. WHY? Because it can identify companies that are improving their financial situation, alert you to major events ahead which may affect price of the shares...in general it gives you another perspective on a company.

Now my working career is quite diverse, mainly related to health/safety/environment fields but not all the time. I come from a railway family, my father and grandfather worked on the railway (Canadian National Railway). When I was going to university in the late 60's early 70's, I also worked on the railway as a member of EXTRA GANG 101 the largest "relay" gang in western Canada. A relay gang changes out old rail for new and we replaces 78' rail for 1/4 mile rail back in those days...an 80 man gang which in 5 months went through 500 workers...I worked hard physically, once in my life for the princely sum of $1.25/hour for a 12 hour day 6 days a week with free room/board on the work train.

It was a coming of age experience for me. Back then the railway was maintained by "section men". Each man had 10 miles of rail to look after...each 150 miles or so was supervised by a roadmaster. Nowadays, there is no such thing as section men. As I walk along a railway line now I see spikes and splice bolts that are loose, sometimes ties that are not set firm in the gravel...maintenance is done only when there is something grossly wrong IMHO. Yet more and more demands, longer trains are being made on these railway lines. You see mile long trains of hazardous materials dragged through cities...in Calgary last year we had a 100 year flood...a 100 year old bridge with water near the rails was deemed safe enough to drag a 100 unit oil tanker train over it...the rails collapsed and 3 cars almost fell into a raging Bow river...I just shook my head. A year ago a unattended train of crude oil, out of control derailed in a small Quebec town, Lac Megantic and decimated the community when it blew up and it is not the only derailment/fire as it has happened a couple of times in the USA

More and more, oil is being transported by rail instead of pipelines. Pipelines have all kinds of environmental hurdles to pass (as they should) but there has been little attention paid to railway transportation...until these accidents.

Part of the problem is that many of these tanker cars are ancient sometimes 50 years old with no upgrades to hazardous materials tankers.

That is when I noticed a small company called Kelso Technologies Inc who had developed a proprietary tank car service equipment used in the safe loading, unloading and containment of hazardous materials during transport.

Innovative Transportation Technologies | Kelso

What timing...they had just opened a manufacturing plant in Texas and as far as tanker upgrading goes they are basically the only game in town. Can you imagine how many tankers need upgrading or outright replacement.

so I check out their balance sheet.... no debt for the last 5 quarters.

Stock Market Quotes | Company Financials, Financial Information

I check out its income statement... operating revenue is rising...revenue costs and selling admin costs too but the company has a positive net revenue in the range of $1.5Million per quarter. A bit of a decline in net reveue because of increased costs that they have to work on. Do you think their sales are going to fall? Is the demand for their product limited....I don't think so.

Stock Market Quotes | Company Financials, Financial Information

So ..... that is how I found this company....my railway interest, my environment safety background and listening to news.

Technical Analysis of Kelso Industries Inc

here is the chart





there is lots to talk about so let's get started

(1) this area looked bad for the stock....Slow Sto and MACD dropping and the BBwidth trigger seemed to be pulled but look how weak the MACD became and how the Slow Sto reversed direction....this was a head fake as far as a decline was concerned.

(2) the real buy signal occurred here and I jumped into it for my phantom portfolio and in one month it reached (3)

(3) I sold here...it was over 30% gain in less than a month and looked to be falling...I did not want to lose that gain.....I jumped the gun and should have held....but 30+% is 30+% and I forgot about the stock for a while.

I acted a bit irrationally, kicking myself for selling in the first pace and jumped back in on May 6/7...it was late in the rise and actually only a week away from the top of the run at (4)

(4) I did not sell here but I really believed in the company and held the stock all through (5) even though I was in a loss position.

(6) my patience was rewarded when it looked to challenge the resistance at $7.25 but that failed (probably due to that last quarterly report.

Prediction

I am being technically irrational here. Having studied this company, its products and issues in the problems with oil transportation. I believe this company will rise over that resistance at $7.25.

I have not been led astray by Fundamentals...actually I wish I had held at (3) and sold at (4) and waited til another good buy signal was generated. But I did not {shrug} however when (not if) I see that Buy signal I will add to this company.

More and more I find myself involved in looking at fundamentals of a company...not just at a single financial report....it is meaningless to look at ratios in a single report...it would be like looking at a single price and making a decision...I like trending those ratios to find out where they are going... I think FA and TA could be a good marriage.

Good trading

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on Algonquin Power & Utilities


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(6) Prediction

this breakthrough could happen any time now...If I looked at other charts I am sure I would see confirmation of a bullish breakout...the Slow Sto looks to be rising a hint in the MACD...and the BBwidth is quiet as a mouse...BUT WAIT FOR THE TRIGGER...that is a strong resistance and it could deny the breakout.

It is a HOLD at this point....but I would be looking around to see if I had extra money to add shares if it breaks out which I am 90% sure it will.

I wish all my predictions came true so soon


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 ratfink 
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I wish all my predictions came true so soon

Nicely done squire.

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I woke up this morning and looked at the price of gold and shook my head....What is happening here??



You try to find out stuff reading the published discussion, so I go to Kitco which to me gives the best discussions but this is the only one that made sense to me.

https://www.kitco.com/reports/Commodities_Daily_20140814_121415097.pdf

I will quote a bit from this discussion


Quoting 
Standard Bank - Daily Report
Standard Bank Global Commodities
14 August 2014

Precious metals

Precious metals are range-bound. Gold is caught in the $1,300 – $1,315 range, while option open interest for the September contract is still straddling gold around the $1,300 level. While technical indicators are holding gold firm, other market forces we believe should continue to cap upside.

.....

Gold support lies firmly within the $1,384 – $1,300 range and, until there is a clear break below this range, we believe shorting the metal holds little value from a risk/return perspective. Tactically, we see the risk to the downside for the metal.

Everyone else says China/India is buying/selling....blame China/India {shrug} Long term their purchasing power certainly affects the price but not that sudden drop and rise again...I am sure the analysts will conjure up some reason in 20/20 hindsight but they don't seem to see it in advance.

Here is a daily chart as of a few minutes ago



What amazes me is how the drop stopped at that solid green support and is now rising again leaving a shadow behind.

This is why I don't like following "news". You can go crazy following speculation. Hard news (mergers, financial reports, major corporate events either positive or neg) aside the rest is just verbal crap. I would much rather trust my charts

What I see is that the price of gold is bouncing within a solid line triangle of R/S....to my way of thinking there will be a decent move in gold which is coming and will break those solid lines....the dotted lines are secondary supports for R/S.... those must be broken before a real direction to the price of gold can be determined.

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This was another decent week we came close to an all time high for portfolio value and we would have been there if it were not for the fall of gold {sigh}

I have added a small chart to the spread sheet to show how the portfolio is faring...you can see how well the rebalance of the stock mix since the end of June.



I have finished my series on discussion of that "Buy/Sell Trigger" chart.

If you have a company you want me to look at let me know and I will do its chart here..... or perhaps you have a topic that you think I can comment on....feel free to mention it .

Good Weekend!

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Well this week has started well so far...We are up a little over 0.5% so far and are riding an all time high for the value of the portfolio... but then I will show details on Wednesday...hope those gains hold

Gold is continuing playing its silly games...here is the chart



As you might expect by now, the price is crawling forward within that triangle...nothing has changed except a few dollars.

However I think I will do a full-meal-deal analysis on the charts.....keep in mind that these following charts are based on EOD data so today's data is not included

I will show you how I use multiple charts to arrive at a consensus of "Indicator/Overlay" opinion....



(1) This chart is not the best....See how the price has flirted with the 50daySMA and retreated...I can see from the chart above that the shadow from the previous day is being duplicated with a more convincing solid candle body...it is still above the middle band (20daySMA) ... however the 20daySMA looks to be crossing the 50daySMA from above...This is Bearish to me

(2) We haven't really talked about Parabolic Sar but see how the upper ParSar hit the share price right in the throat of the narrow BBwidth on Aug 8...this is a sign that I find reasonably bullish (otherwise I don't really like this overlay's signals though it can be useful in determining the lenght of a run)....This is mildly Bullish to me

(3) Look at that Slow Sto .... very strong a week or so ago then it hit a wall and has gone flat ever since... This is Neutral to me...neither bullish or bearish as this indicator could go any direction to me.

(4) Look at the MACD ... it started to follow the Slo Stow getting hopes up but now right around a zero value it has flattened out.... this is also Neutral to me for the same reasons as the Slow Sto

(5) Look at the BBwidth ... it fell dramatically to a level where a breakout would occur....but then it said uh...uh...I am not pulling the trigger...it won't tip its hand as to when... This is Neutral to me

We are getting a lot of mixed messages....next chart




More mixed messages..........

(6) The CMF looks bad for a while....I like using this as an underlay to the closing price... See how the rise and fall of the closing price generally follows the rise and fall of the CMF. The CMF is currently stuck in that mud and we cannot see the effect of today's drop in price .... I would say this is Mildly Bearish right now...I don't see the CMF climbing out very quickly right now for sure but I don't think it will fall to great depths...yet...any way.

(7) The RSI is dead-assed Neutral... the slope of the best line through the points since mid-July is VERY close to zero

(8) The DI +/- is Bearish looking to me....the red/green lines are a heartbeat away from a bearish cross so one must call a spade a spade here. The actual ADX black line is declining showing weakness in the trend this suggests to me a change from Bullish green-side-up to Bearish red-side-up is imminent.

Here is the last chart....an Ichimoku chart + 2 more indicators (unrelated to the Ichimoku chart)





(9) Look at the share price entering the green cloud...this is not good...at the best we can hope for a prolonged struggle through this green goo... the upper edge is a resistance the lower edge is the support... the only saving grace about this is that it is not a much more difficult red cloud....This is Mildly Bearish ... if it was below the cloud would be full on Bearish

However, even there, there is a glimmer of hope for a bullish rise... Look at those thin red/blue lines at the last candle....see how the thin blue one looks to be climbing to cross the thin red one....it is a faint hope hearing to get a pardon out of this green cloud prison and is another reason the above evaluation is only mildly bearish

(10) The on Bal volume is rising and above(for now) the red moving average.....this is mildly bullish

(11) the CCI is Mildly Bearish... it never made it over 100 and is soon to fall below zero...it is only mildly as it could turn around quickly and be bearish

Conclusion

As you can see we get a lot of mixed messages here...that is life with indicators...but that does not bother me....I seek a consensus...so lets look at the totals

Very Bullish ........... 0
Bullish ................... 0
Mildly Bullish ......... 2
Neutral ................. 4
Mildly Bearish ....... 3
Bearish ................. 2
Very Bearish ......... 0

now you cancel out opposites and look at what you have left

Neutral ................. 4
Mildly Bearish ....... 1
Bearish ................. 2

So looking at this....because of the number of "neutral" indications I would conclude that the price of gold...at this point is Mildly Bearish.... mildly bearish to me means that it is only a watch but I am not hopeful of a turnaround...Were this a stock I might keep it on my watch list but in reality I would probably discard it in favour of a better opportunity

Let us see if this prediction will be born out.

I think this is the first time I took you through a complete analysis...now you see how even though each indicator gives a slightly different (even opposite) look at the future of a price...If you select a good set of indicators/overlays that do not give the same look...You can get a reasonable assessment.

Hope this was interesting to you

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  #274 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well here it is a day later and this is the 5 minute chart for Gold




I hope this fall is caught by the secondary (green dotted in the previous chart) support...yep it is definitly mildly bearish now ....poised to go full on bearish. But as we have seen in past months...it seems to be able to change quickly...after all, it is not like there is peace and contentment in the world, is there?

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  #275 (permalink)
 ratfink 
Birmingham UK
 
Experience: Intermediate
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I hope this fall is caught by the secondary (green dotted in the previous chart) support...yep it is definitly mildly bearish now ....poised to go full on bearish. But as we have seen in past months...it seems to be able to change quickly...after all, it is not like there is peace and contentment in the world, is there?

Sadly the Fed's balance sheet is still miniscule compared to the amount of debt outstanding. I don't think the value of gold will mean much until we have a complete new monetary system.

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  #276 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
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I thought this might be a good subject to introduce to the newbie traders...and not so newbie .

I will show you later what to look for in a stock chart....but first I want to show you a discussion from another website where they describe a PUMPER in better terms than I ever could

Here is a link to that discussion...it is worth a complete read to understand the beast I just took a section to whet your appetite

Dominican Rock: Stock pumper's Manual


Quoting 
PUMPERS DO THE FOLLOWING:
1. Be anonymous
2. Use 10% fact. 90% suggestion. The facts will lend credibility to your suggestions.
3. Let others help you learn about the stock. Build rapport and a support base before initiating your pumping routine.
4. Enter w/ humor and reply to all who reply to you.
5. Use multiple ISP's, handles and aliases.
6. Use two (2) or more aliases to simulate a discussion.
7. Do not start with an all out pump of the stock. Build to it.
8. Identify your foes (bashers) and the boards "guru" Use them to your advantage. Lead them do not follow their lead. Ideally, you will become the boardís guru.
9. Only pump until the tide/momentum turns. Let doubt carry it the rest of the way.
10. Give the appearance of being open minded.
11. Be bold in your statements. People follow strength.
12. Write headlines in with catchy statements.
13. Pour it on as your position gains momentum. Not your personality.
14. Don't worry about being labeled a "pumper". Newbies won't know your history, and you are supporting their choice to purchase the stock in the first place.
15. When identified put up a brief fight, then back off. Return later unless your foe is a weak in reasoning powers.
16. Your goal is to limit the momentum of the drop. Not to make the company blast off; be subtle and consistent.
17. Kill the fears of losses, promote the company and the stock.
18. Use questions to create critical thinking. Statements to reinforce facts. THAT CAN BE PROVEN, NAME CALLING AND PROFANITY AGAINST SHORTS IS ENCOURAGED.
20. Tell people that you have called the company. They'll take your word for claims made. If they do call to verify you can always find something that is missing from their response.
21. Encourage people to take the companies word for everything. Encourage them to call the company. They won't out of laziness.
22. If the companies history/PR's are positive constantly point to that. Compile a list of this data prior to beginning your efforts.
23. If the price falls blame it on temporary outside influences, temporary mass reaction, the market, etc. Anything but the stock / company itself.
24. If other posters share your thoughts, play on that and share theirs too.
25. Always cite high volume, even when it's not.
26. Three or four aliases can dominate a board.
27. Bait the bashers with personal attacks putting their focus/efforts on you and not the stock or facts. Divert their attention from facts. Show them the facts from a "different angle."
28. Bash other stocks that would-be investors can turn to instead of the one youíre pumping.
30. Do not fall for challenges on the "values" of what you are doing, it's a game and you are playing it with your own rules.

I have seen all of that and more in the chat rooms I have been associated with over the years.

Some of what I will add to the above is:

1. A really good pump often starts with "some good news" (usually unspecified) that will revive an ailing company and make it a real winner. Maybe it is a loser biotech that looks to be getting FDA approval soon...or perhaps they lost the approval test but never fear they are challenging the result and have the data to reverse the decision.

or it could be a mining company with a drilling report to end all drilling reports.

or it could be a merger with or buy-out by a huge company (unknown so cannot verify) and the announcement will be very soon!

2. They often get this into media rags that feed the pump....they usually print anything they are paid to print (to know that the print is not honest journalism look at similar "news" and you will find it word for word identical...it is a script.

3. The pumper will quote this "news" as proof that this stock is hot.

4. They use language like " I'm going to back up the truck and get me some", "this is a 1 bagger (2 bagger, 3....)" a bagger being a 100% gain, " you gotta get in early so you don't miss it....this stock is on fire".

As the stock rises a little...."man, gonna ride this stock to the moon", (for a stock worth $0.10) "this stock will be $1.00 by the end of the year" yeah right!

the stock starts to fall ... "here is your chance to get a bargain...buy on this dip!"

I hate pumpers

they prey on the newbie, uninformed and yes....greedy. I have been asked to leave a couple of websites because I was interfering with their pumps by giving negative readings on the stock. I like futures.io (formerly BMT) because there is no pumping from what I have seen here in the last 6 months...I doubt Big Mike would tolerate it at all.

Now...what if you don't patronize chat sites where pumpers lurk...how do you recognize a pumped stock from a chart???

here is an example of a pumped stock's chart



this is an amazing pump as it truly made a lot of money for some.

Note....

1) prior to the pump there was almost no trading of the stock....this is a huge red flag

2) some pumps last only a few days .... this is an exception lasting about 20 days

3) look at the volume history....rockets to a maximum and falls thereafter eventually back to what it was prior to the pump.

4) the price shoots above the upper bollinger band (in this case often).

If you stumble across a stock that seems to be taking off and you see this profile forming....be very careful.

Can you make money off of a pumped stock?

Well yes...as long as you recognize the stock for what it is.

But that is a subject for the next POST (such a tease )

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  #277 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
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ratfink View Post
Sadly the Fed's balance sheet is still miniscule compared to the amount of debt outstanding. I don't think the value of gold will mean much until we have a complete new monetary system.

yeah...not just the USA but Europe as well. I find it odd that the fear factor of the present is not working...then again I doubt the Chinese or Indians care a lot for the mid-east or Ukraine problems.

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  #278 (permalink)
 Big Mike 
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Well on futures.io (formerly BMT) we disallow OTC penny stocks from being discussed at all, so that eliminates virtually all the "pumping".

Mike

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  #279 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014


Big Mike View Post
Well on futures.io (formerly BMT) we disallow OTC penny stocks from being discussed at all, so that eliminates virtually all the "pumping".

Mike

Yes that would eliminate most of those pumps for sure...but they do exist elsewhere...like AMEX or NASDAQ... Actually a lot of the IPO's I see in the past year seem like pumps to me.

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  #280 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Here is a summary of the portfolio as of the closing prices for Aug 20/14



As you can see we have started a great week with us being 1.48% to the good...and this without the benefit of a surge in Gold.

I thought I might upload the spreadsheet I use. This is not a very complicated one...the one I really use is much more complicated that this but it serves this journal quite well.

This attachment is a workbook of three pages inside.

The pages are interactive ... data entered on one page might be transferred automatically to suitable cells. It is not rocket application...feel free to use it if you don't already have a good record keeping system....this could be a starting point.

Just to show how it works let use say I completed 3 transactions

a) I bought 1000 shares of ABC company [TSX:ABC] @ $10/share (new company)

b) I bought 2000 shares of XYZ company [TSX:XYZ] @ $20/share (existing company)

c) I sold 2000 shares of JKL company [TSX:JKL] @ $20/share (existing company)


A) bought 1000 shares of ABC company (new company)

1. Go to the second sheet
2. the quick way is to
---- copy and paste a company eg: TD Bank (rows 22 to 28)
---- Go to A77 and paste the rows in duplicating the record for TD Bank then over-write the info for the transaction into the appropriate boxes...note the calculations will be done automatically
---- this creates the company record for all transactions
3. Go to the third sheet
---- Add the details of the transaction (insert more rows when you run out.) at the bottom of the list....this updates the available cash which is automatically copied over to the first sheet under Canadian Stock Summary - Cash on hand
4. Go to the first page
----- create the new company name and ticker in the current position area and add the currenbt price
----- simply copy and paste the Total Shares to Gain/Loss% from another record to fill out the rest of the record
----- Edit the cells for Total Shares and COST to link the cells to the proper cells in the new record you created in step 2

B) bought 2000 shares of XYZ company (existing company)

1. Got to the second sheet, find the company, copy a transaction record to the next row under the previous one and fill in the information that you did in part (a)
2. Add the transaction info in sheet 3 ..... and you are done...the rest of the information up dates automatically.

C)sold 2000 shares of JKL company (existing company)

1. Got to the second sheet and find the company's record
2. the simple way and way to make the least changes is copy a partial record from an already since all the formulas are there
eg.
---- insert lines so that there is at least 6 rows between the last purchase record and the totals rows.
---- copy rows for the last redemption/totals/residual and paste them into the inserted space (eg. copy rows 157 to 162 from the inactive stock Nordion inc.
---- change the date and overwrite the details of the transactions on the redemption side....all of the totals update
(be careful to make the sums match if there were several Buy transactions)
---- cut the company record and paste it again at the bottom of the inactive stock list.
3. go to sheet 3 and add the transaction details
4. Go to sheet 1 and you will see zeros for the calculations for the company....simply erase the company information.

Adding dividend information

---- Go to sheet 3 to the top create a new record modeled after those already there... the dividend are automatically to the cash on hand...nothing more to do.

a new week for the Summary information

---- go to sheet 1
---- make sure the date is set properly ...then copy the record and paste it on the line below
---- then paste/values (special paste) to the row that you just copied to remove the formulas
---- change the date to a new date on the copied record and also in the title Current Position as of:
---- the chart will update automatically for several weeks.

This is not the most exotic workbook...I do a lot more in my real record keeping because of the multiple portfolios involved there but for those that do long term or swing trading it can be a nice start...I doubt it would be suitable for day trading but it might. I find this handy for maintaining the status of my holdings as well it is useful come tax time.

Hope you like it....good trading

Attached Files
Register to download File Type: xlsx test Stock worksheet.xlsx (73.9 KB, 5 views)
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  #281 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Looks like my mildly bearish assessment a few posts ago turned true....now it has amped up to fully bearish and stopped at that dotted green support at $1275 or so. If it falls and closes below this then it will be VERY BEARISH (my highest level...)




this is the 5 minute look at the chart....looks like the $1275 support level will be tested again pretty soon.....fingers crossed.... next support is about $1220....then $1200...then could fall a lot further.

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  #282 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well it did stop at about $1275...for now anyway....here is the gold chart redrawn with new support lines (the old support really don't mean much now...Perhaps the horizontal ones that once were supports but broke through MIGHT be resistances now but since they were easily broken lately I doubt it.

Here is the chart



these solid lines should be major supports/resistance now...why because they are made up of significant peaks and valleys

I did not consider this latest support until it fell through the previous dotted support....now I set another secondary support at 1250 and 1200...those should still be decent supports.

We seem to be lost in that wilderness land between $1250 to $1350...we need a financial Moses to lead us out of it.

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  #283 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well the week is over and we have salted away another solid gain. To date we have exceeded the previous high point for this portfolio and I have a confidence that this success will continue.



Again you will see that I have no tentative transactions in mind...that makes about 3 weeks no with little or no change. Those stocks that are negative return have recovered and are almost at the break even point and now contributing to the bottom line.

Have a good weekend.

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  #284 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

I am still very happy with the mix of stocks in this phantom portfolio...but you cannot be complacent

I have 2 stocks right now that are looking weakish....I gained over 0.6% today which is excellent and it would have been more if Lakeshore gold Corp [TSX:LSG] and Lundin Mining Corp [TSX:LUN] had been performing better.

Lakeshore Gold Corp

This is a stock governed by the price of gold and as such it seems to be holding up rather well considering the uncertainty of the direction of gold's price.



there is a support band between $1.15 and $1.18 that I think will be substantial...it probably relates to a gold support as well I would expect.



the declining Slow Sto and MACD are definitely not good signs and the position of the share price near the bottom near the lower Bollie adds to the gloom....but I take heart at the weak response of the BBwidth in the bottom chart ... it is very anemic at present but could be just the start of a rise in which case you will see a decline in the share price. I find some hope also that 50dayMA is confirmation of a support to come at $1.18

I believe this will be a buying opportunity if it does and it has nothing to do with the company...it is simply due to its commodity Gold...and I expect that gold will bounce back with time. So...LSG.TO is still a hold for me.

Lundin Mining Corp

this chart is subtly different than that of LSG.TO



Right now we are virtually sitting on a band of support from $6.00 to 6.03...if this support fails there will be no rebound for a while...it could drop to $5.90 or more probably to around $5.70.... thereby starting a wipeout of the gains we made.

You could say that we already lost a fair bit of profit....true enough looking at 20/20 hindsight but when I am up I tend to be more forgiving ... I am not afraid of a loss.



If you look at the Slow Sto and MACD you will see them about the same as the previous chart...the BBwidth though is a bit more robust...in addition the 50DaySMA which was a support failed and now are a resistance.

As a result I think this stock has more potential for failure.

But I don't yet give up and sell outright...it could still come back...as a result I am setting a stop limit loss order for this stock.

Effective the opening bell on Tuesday Aug 26 I will set a Limit Stop Loss for 2000 shares of LUN.TO with a range of $5.93 - $5.95.

why do I set it below $6.00? It is because I don't want a small downward spike to trigger the sale.

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  #285 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

I am sorry....the case of the disappearing charts raises its head again

Here are the charts that were attached but now have disappeared

LakeShore Gold charts








Lundin Mining Corporation charts








these charts are in the order that they are discussed in the above post...I hope this makes sense

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  #286 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

later today I will post the mid-week status of this phantom portfolio.

I have run out of interesting stuff to talk about right now. A few posts ago I suggested I might talk about how to play a pump/dump but Mike is right...90+% of those plays are in the OTCB and Pinks and discussion of those stocks is off-limits here and rightly so as it is hard to do any kind of proper TA on these manipulated stocks.

I am open to questions, or discussions....feedback is also welcome.

Being a long term trader, once the portfolio is performing you don't touch it much. As you can see I have done little since late July. I have expressed concern about LUN.TO but since I put on the limit stop-loss...it has been rising.

Anyway...back to doing other stuff....good trading

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  #287 (permalink)
 josh 
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nice job!

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  #288 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

hmmm I guess thanks for deleting the previous post, Mike...I assume this person said something disrespectful

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  #289 (permalink)
 josh 
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hmmm I guess thanks for deleting the previous post, Mike...I assume this person said something disrespectful

Likely a spam bot.

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  #290 (permalink)
 Underexposed 
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I guess I am paranoid I am not used to being on a trading website doing what I do and not getting some kind of negative comment. It is a testament to the quality of the participants here and to Big Mike himself.

Well the good results seem to be continuing. The portfolio has passed the $109,000 mark as shown in this graphic.



Lundin mines [TSX:lun] is really the only stock I am worried about at this point. It may seem like Kelso Technologies is a problem since it is in negative territory but as I have said many times before this company has potential and $800 or so to the red would disappear quickly.

I should show the charts of all the stocks in the portfolio soon but [TSX:KLS] is rapidly approaching a Bollie squeeze so I will wait til then before I make a decision on this stock.

I have decided on a new topic to explore.

Can this TA I use be used in Intra-day trading. Now I don't have the skills most of you day traders have as far as picking a good stock to try it on...I can do the initial optimizing (selecting indicators and time interval for the charts) .

Perhaps we can run something in real time...well updated real time...we shall see.

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  #291 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well so much for hope...today Lundin Mining [TSX:LUN] fell briefly to $5.94 so I will assume my limit stop loss tripped and sold the stock at $5.95

I now have to make a decision on what to do with $12,400.00. I think I will look for one or two growth stocks in the $1 to $5 range using the same technique I used for finding dividend stocks...I kinda liked that method.

here is the chart for Lundin Mining....looks like it is on a slippery slope now...a $1,200 or so profit or about 10% is fine for a 4 month hold.



I will put the intra-day posts on hold...I still have things to workout there anyway.

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  #292 (permalink)
 deaddog 
Legendary Market Wizard
Prince George BC Canada
 
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Underexposed View Post
I guess I am paranoid I am not used to being on a trading website doing what I do and not getting some kind of negative comment. It is a testament to the quality of the participants here and to Big Mike himself.

Well the good results seem to be continuing. The portfolio has passed the $109,000 mark as shown in this graphic.

Well there is not much negative to say about your journal. You are one of the few who puts their trades out in real time. Who shares their methodology freely and is willing to help others without asking anything in return.

However if a little negativity will make you happy it seems to me that for all the time and effort you are putting into this long term portfolio an investor would have done better just buying the Index. Since you started on Feb. 11th the TSX capped composite ETF (XIC) has returned 13.8%

"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
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  #293 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
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deaddog View Post
Well there is not much negative to say about your journal. You are one of the few who puts their trades out in real time. Who shares their methodology freely and is willing to help others without asking anything in return.

However if a little negativity will make you happy it seems to me that for all the time and effort you are putting into this long term portfolio an investor would have done better just buying the Index. Since you started on Feb. 11th the TSX capped composite ETF (XIC) has returned 13.8%

that works in good times...a blind monkey can do well in good times...if it were as simple as following an indexed ETF then everyone would be rich....sadly most are not.

But your comments are welcome and thanks for the feedback.

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  #294 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Well Thursday was not so hot and pulled us back a bit but today brought us back a bit. Still looking good and 9.0% looks to be in the rearview mirror soon (fingers crossed)

Here the portfolio status




As you can see I have almost $12,500.00 jingling in my pocket and I want to buy something.

I suggested in my last post that I might try the way I picked dividend stocks 2 months ago....Well I started to do that and gave up. When looking for a dividend stock, I want consistency, stability in dividend earnings and such.

But I now realize I am looking for a growth stock...looking back further than 1 year is a waste of time I now realize. Some stock that grew nicely 5 years ago may be a has-been now.

So I will shift gears over the weekend and conduct a fundamental search based on debt (low) and earnings(good) and raise my sights on share price from $5 to $10 (I always like at least 1000 shares at this price range)

Wish me luck...I will as always document the process.

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  #295 (permalink)
 deaddog 
Legendary Market Wizard
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that works in good times...a blind monkey can do well in good times...if it were as simple as following an indexed ETF then everyone would be rich....sadly most are not.

But your comments are welcome and thanks for the feedback.

Letís think about what you just said.

ďIf it were as simple as following an index everyone would be richĒ.

What if it were that simple? What if the secret to being rich was to buy the index and hold it until you needed the money? No trades except to add to a position if you have extra cash. No taxes every year on capital gains unless you pull money out to live on.

Why isnít everyone rich? Human nature. We refuse to believe it can be that easy. We were taught that you have to work hard to accomplish something worth while. We refuse to believe that doing nothing is better than doing something.

Yet the proof is there. Many studies have been done and the results show that the majority of portfolio managers cannot beat an index fund.

Renown investor Warren Buffet advises that the majority of investors would be better off in an index fund.

Quoting 
: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguardís.) I believe the trustís long-term results from this policy will be superior to those attained by most investors.

The harsh reality is that in good times the blind monkey is significantly outperforming your actively managed portfolio. In bad times, I believe your strategy is to hunker down and wait for good times.

Underexposed, I am not just directing this at you but at everyone who invests/trades in stocks. (Unfortunately there arenít too many of us active here) Step back and look at your performance. Take a long hard look at your goals. Is your goal to get the best return on your money?

Questions every investor/trader should be asking themselves:
If you are not outperforming a simple index then what are the reasons?
What changes do you have to make to your investing/trading strategy to improve its performance?
Is the time and effort you spend researching and actively trading stocks worth the returns you am earning?

Maybe it is as simple as buying the index and we are afraid to try it.

"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
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  #296 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014

Your comment is welcome...however, examining one's goals is a personal quest.

I am happy with my goals and performance. I have lived on the proceeds of trading 95% over 10 years of retirement, the other 5% comes from government pensions that cover my rent and nothing else...I don't have a company pension. I make enough money to satisfy my needs and I am not limited in my needs

I don't give a toss about making a ton of money....that goes contrary to my beliefs. What Mr. Buffet advises is fine and is probably useful for those that need advice. I like to figure things out for myself and I am pretty good at what I do. Investing is a sector ETF is boring to me...don't want to do it don't want to discuss it.

Take such discussions to your own journal is you wish and others may discuss it if that is your wish....but it is not a discussion I want to dominate my journal.

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  #297 (permalink)
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Calgary Alberta/Canada
 
 
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well I have embarked on the first step...a basic scan for potential companies.

At this point the portfolio has been basically stocks from the Toronto Stock Exchange [TSX]. But this go-round I want to look at adding one or two stocks from the TSX Venture Stock Exchange [TSXV]. For those that are unfamiliar with Canadian exchanges the Venture exchange is a place where it is basically a place for start-up commodity companies in the O&G, mining, foresty, etc.... To me it is like the AMEX exchange....it used to be more like the OTCB and grey market but that has changed ....

There is an OTCB type exchange in Canadian markets...it is called Canadian Securities Exchange [CSE] or sometimes it goes by [CNQ]....personally I would never search that place for opportunities.

So I composed a basic search based on being a company that earns money with little debt and I came up with 9 possibilities




This is a quick look and summary chart for each of the selections. At least half of them look half decent. Next step is to look at fundamentals a bit further to narrow the choice a bit and then on to TA



The next step is to look closer at fundamentals to narrow the field a bit and then it is on to TA

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  #298 (permalink)
 deaddog 
Legendary Market Wizard
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I am happy with my goals and performance. I have lived on the proceeds of trading 95% over 10 years of retirement, the other 5% comes from government pensions that cover my rent and nothing else...I don't have a company pension. I make enough money to satisfy my needs and I am not limited in my needs

A very enviable position to be in. Would you be able to share how you go started and how you got to the point you are at now? It would probably be of great interest to the guys starting out with limited capital.

"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
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deaddog View Post
A very enviable position to be in. Would you be able to share how you go started and how you got to the point you are at now? It would probably be of great interest to the guys starting out with limited capital.

Frankly, in these days of immediate gratification, I doubt many would follow my path.

I started over 35 years ago....no interest in stocks...the interest was there but back then it was all full service brokers and shrouded in mystery. In the late 1970's and early 1980's you could get 12-18% on a Guaranteed investment certificate (GIC). I have had 5 careers and about 2 jobs within each career. My father encouraged me to start an RRSP (registered retirement savings plan) when I was 25, a tax shelter still ongoing.

I did not like company pension plans since back then they were not portable and locked in until you were 65 and you had no access to the money til then (things are different now though). I also did not believe that many of these companies would be around to pay out on my 1-2 years of contributions.

So I decided to create my own pension plan. I found that I could put away more money into my own plan than I could through company plans so back then you could contribute 18% of earned income to a max of $11,000 yearly into the plan...and deduct it from your taxable so it was like getting a 30% return (the amount of tax you would lose if you did not do this) in the first year....and I put the money in 5 year GIC's which got you that 12-18%. I religiously did this for most of my working life which ended about 10 years ago. This is how I built up my poke.

the mega interest GIC's ended in mid 1980's and toward the end of 1980's the last one collapsed. So that is how I built up my pension and did not fear coming retirement....luckily I never needed to dip into this plan so it just snowballed along.

Interest in stocks started in 1980. I have a strong science background and no financial background so Technical analysis appealed to me more than Fundamentals. Point and Figure charts appealed to me as they seemed exotic compared to line charts so I read a few books from the library and started to charts by hand every Saturday afternoon with the only free financial information at those times - the financial pages of a major newspaper.

I manually charted in P&F on graph paper over 100 companies, was disappointed in the traditional box sizes and worked out my own method (which I still use today). I was fascinated at how resistance/support lines, horizontal or diagonal worked. About then I tried Mutual funds through the bank but quit after a couple of years when they objected to me selling them and buying new ones....they wanted me to buy and do nothing....I never made money that way.

In the late 1990's there was an explosion of information available on the internet...eventually I discovered charting services like Stockcharts.com and Bigcharts.com. I was introduced to indicators and did readings on Moving averages, Bollinger bands, MACD etc. I paper traded for years experimenting with combinations and parameters on indicators.

About that time I also joined a software house and eventually they had a sweet deal. Every quarter you could invest up to 10% of your salary into company stock...they would match your purchase with an equal amount of stock and they would set up a brokerage account for you AND look after the brokerage fees. Also the stocks were immediately vested (meaning I could sell them anytime I wanted to).

Well, that got me into the market....I had a broker now so I went to him to discuss further trading....and that was a hilarious meeting for me.

He was trying to access my tolerance for risk.

Him: "What if I picked a stock for you and it lost money?"
Me: "Well I would check out the stock suggestion and if I liked it the loss would not bother me..."
Him: "What if I picked two stocks for you and they both lost money?"
Me: "Again, if I approved of the purchase I would not like it but I approved them so ... sobeit"
Him: "What if I picked five stocks for you and they all lost money?"
Me: "If you picked five stocks and all were losers....frankly you obviously don't know what you were doing and I would get another broker"

He laughed...I was serious.

I could never figure out the commission schedules and my picks WERE out performing his over the next year. Our group at the software house was chopped and I no longer worked for that outfit. I discovered that I would make money in those couple of years except for the high commission fees.

I discovered discount brokerage in my case TD Waterhouse...switched my account to them...refined my charting ability and when I felt comfortable enough to have it as a sole income I retired and have lived on investment income ever since.

My TA has not been static...through interaction with others on various websites, reading charts and observing how well my readings over the years been...I have developed a pretty good batting average....recently adding basic FA to the mix makes my choices even more reliable IMHO.

So, to those beginning your investing career...I don't think you would follow my path and giving the internet resources today back then my journey would have been a lot shorter. But I learned steadily over this time....my education was not done on the backs of blown accounts. I practiced my thoughts in literal paper trading....Excel spreadsheets and financial data allows you to do your own REAL paper trading .... you don't need a simulator to do it...you learn more doing it manually. Develop a trading style, read books and experiment yourself....this site with all their journals gives you insight to successes and failures of others which will help you.

Long term trading is not the most popular method and if you believe rag media this type of trading is a losing game....in some respects that is my reason for this journal as I want to demonstrate that you can make a decent living in long term trading...it is a lot less pressure when you learn how and you can leave your computer for days at a time an not fear ruin overnight.

But having said that, there are many successful day traders, options and commodity traders...and so that is fine, just not for me.

-----------------------------------------------------
And finally to @deaddog....you now have my complete history....I know you love to analyze this kind of stuff. But this is NOT what my journal is for. If you are smart you will realize this and not probe me any more on the subject... you would be hijacking my journal purpose and I would be forced to put you on ignore...like I almost did a while ago....OK?

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  #300 (permalink)
 deaddog 
Legendary Market Wizard
Prince George BC Canada
 
Experience: Advanced
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Broker: IB
Trading: Stocks
 
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-----------------------------------------------------
And finally to @deaddog....you now have my complete history....I know you love to analyze this kind of stuff. But this is NOT what my journal is for. If you are smart you will realize this and not probe me any more on the subject... you would be hijacking my journal purpose and I would be forced to put you on ignore...like I almost did a while ago....OK?

Fair enough. Iíll ban myself from your thread and save you the trouble.

Itís too bad because youíre about the only poster here who is willing to discuss trading stocks. Then again a system that doesnít beat the index isnít of much value.


I am amazed at how similar our investing paths are. It looks like we started about the same time,(it took me a while to figure out that brokers were just salesmen and only pushed what they were told) used the same discount broker. (I remember placing trades with Greenline over the telephone using the keypad) Had the same opportunity to buy company stock at a discount and had that stock appreciate significantly. (Forest products Company in my case)

I worked mainly contract so although I was paid quite well I was responsible for my own benefits. I didnít buy into the RRSP opportunity. I figured taxes would be higher when I withdrew than when I put money in and I didnít like the fact that the government would eventually dictate how much I had to withdraw. I wish they had had the TFSA in those days.

At 55 I had paid off my mortgage, bought some new toys, pulled the pin and started living the life of leisure. 15 years later itís the best decision I ever made.

Good Luck:
Buy Low; Sell High; Cut your losses short and let your winners run.

"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
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