Ask a Technical Analyst

[CruNKinTILT]

1. I've heard people say that P/E is a technical indicator. I personally don't, but what do you think about this?

2. Do you trade options/futures and if so, what percentage of your total holdings would be comprised of options/futures?

3. Where do most of your ideas come from? Reading specific sites/newspapers? Random browsing? Or do you have specific companies/sectors that you always keep an eye on?

[thehun69]

[ QUOTE ]
1. I've heard people say that P/E is a technical indicator. I personally don't, but what do you think about this?

2. Do you trade options/futures and if so, what percentage of your total holdings would be comprised of options/futures?

3. Where do most of your ideas come from? Reading specific sites/newspapers? Random browsing? Or do you have specific companies/sectors that you always keep an eye on?

[/ QUOTE ]

1. PE is a fundamental indicator.

2. My holdings are all in stocks, at the moment. I am slowly getting into options trading as far as volatility trading, but that's ona one off basis. My ideas, do work well with options, and I have done so in the past, but lately, as in the past couple of years, I just wanted to get back to the nuts and bolts of what I do, and get back to stocks only.

3. Typcially, I do have "watch lists" because I've been trading the same stocks over and over and over again, and that is something that I would suggest to anyone that wants to trade to start getting into. Start with 5-10 stocks, any stocks. When I started, I watched the usual suspects of MSFT, CSSCO, INTC, KLAC (I started getting into trading during the techboom). All I did was learn those stocks, learn the patterns and found how the candlesticks, really fit in well in what I was seeing. That way, when I saw INTC get to a certain price and struggle with it, I knew that was a resistence point, and I was ready, so that if it crumbled the next day, my short order was in, and if it broke through, that means it will climb a lot higher and my buy order was in. Since then, my list has broadened tremendously, and I usually trade off that list. Now, from time to time, I will see what is active off of the scan list at www.clearstation.com or at www.stockcharts.com and get some ideas from there as well. But primarily I trade off my list because I know their habits and formations.

THE HUN.

[mrbaseball]

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Japanese Candlestick Charting Techniques by Steve Nisson

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I can second your enthusiam for this particular book. It has been in my personal trading library for years. If you want to learn about candlesticks this is the place to do it.

[Hobb]

I heard candlesticks TA is fluky and a joke. Obviously you feel differently. In your experience, have DOJIs been consistently reliable, or have you just gotten a couple "big scores"? I thought they were used more as a supplementary TA check, definitely not as motivation for any trade.

[thehun69]

[ QUOTE ]
I heard candlesticks TA is fluky and a joke. Obviously you feel differently. In your experience, have DOJIs been consistently reliable, or have you just gotten a couple "big scores"? I thought they were used more as a supplementary TA check, definitely not as motivation for any trade.

[/ QUOTE ]

I've done well with candlestick trading on a consistent basis and not on big scores. Most of the major candlestick pattersn are extremely reliable in telling you the market direction. I haven't done any studies on it, but done right, it can give you 70% reliability. Listen, it won't always work out, that is a fact. But the nature of TA is such that you know when you are wrong relatively fast, so it minimizes the losses when they occur. No system is 100% accurate. TA is the motivation for many traders and institutions globally and not just a background or supplementary check to see if it coincides with what the equity analysts say. The people who say it is fluky, or a joke merely don't know how to apply it correctly. They don't understand that the foundation of technical analysis is about CONTEXT.

THE HUN.

[mrbaseball]

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I heard candlesticks TA is fluky and a joke.

[/ QUOTE ]

In technical analysis almost everything on it's own seems fluky and a joke. This is why you need to use multiple indicators and ideas and look for situations where they all come together and confirm each other. Any TA indicator is pretty useless on it's own but when in sync with other indicators (and timeframes) can be very powerful.

[thehun69]

[ QUOTE ]
[ QUOTE ]
Japanese Candlestick Charting Techniques by Steve Nisson

[/ QUOTE ]

I can second your enthusiam for this particular book. It has been in my personal trading library for years. If you want to learn about candlesticks this is the place to do it.

[/ QUOTE ]

All of Nisson's books are great. Stephen Bigalow also has a great candlestick book called Profitable Candlestick Trading. I have that and that is great too, but a lot of the info comes from Steve Nisson who essentially popularized it in the West.

THE HUN.

[DJSHAD0W]

What do the charts of SPY and VTI tell you right now?
I'd be interested in an opinion for the next few month..

[gull]

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Last 5 year average approximately 35% annual return.

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Is this geometric?

[hawk59]

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Last 5 year average approximately 35% annual return.

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What chance do you think there is that your returns can be attributed to luck? This is an honest question, I ask myself this all the time.