Using TA to time entries and exits

[Yoda]

Hi kw
do you use adjusted, or unadjusted charts. The ASB has 2 choices and makes a small difference, depending on the dividend.
this thread has been very helpful to me and i am beginning to make adjustments accordingly, after not selling soon enough for a heap of shares. CNU NZ to be doing the right thing, as does MFT. im thinking FPH are a bit high on the PE RATIO. ....?

[winner69]

NG its a working paper series....used by the faultily for their teaching and research..Many large American Universities do this and often co-authored so other Universities share the same info...For the record Harvard does this too....The State University of New York speaks for itself New Guy Its huge and has 64 satellite campuses and has a student role of over 450,000 ...Its business school is in Albany, It's Graduates were ranked No1 in 2012 so they are snapped up by businesses as soon as they graduate..yes their grads were ranked ahead of all others in USA that year, including Harvard....from Google there seems to be about 1000 undergrads doing Business degree Accounting & Marketing alone...

New Guy ..I've done some of your homework for you and I have no time left on this subject..If you haven't heard of these guys just Google the Authors.. google the list of papers they have written... you will find their work are published in various well known Financial Journals..and for my sanity ...just download the damn thing and read it.

This paper appeared in Research in Finance publication last year. Seems to be highly thought of academic publication.

[Joshuatree]

I thought I might start a little discussion on the usefulness of TA for timing. Now I do NOT advocate trading based on TA alone (tried it, lost a lot of money) but if you have used FA to identify a select list of good prospects, TA can be quite useful at knowing when to buy, when to top up, and when to sell. The following are all examples of some of my recent share purchases and sales.

1. When to BUY
I only ever buy companies that are in an uptrend. (Tried buying downtrends, lost a lot of money). The trick is to know when to enter. Get in too early, and the uptrend may turn out to be a dead cat bounce, or fizzle out. Get in too late and you may miss most of the run. My favourite entry point is when the 50 day moving average crosses above the 200 day moving average and the share price is above the 50 day MA. While you miss the early run, the risk of the uptrend not continuing is somewhat abated. I have tried entries based on just the share price crossing above both MA, but 3 out of 4 picks fail to continue on. I confirm the trend by watching the MACD (needs to be in positive territory).

Example: CGF - entry was in early March, when the share price moved back above the 50 day MA and the MACD turned up ($3.64 - $3.81)
Attachment 4517


2. When to TOP UP
Companies that are on exponential uptrends often present difficulties in deciding when to jump in. I have found that many pull back to a moving average, providing excellent entry points while the stock pauses and gets ready for the next leg up. Again, I use the 50 day average and MACD to confirm the uptrend is continuing, rather than the price decline being the start of the new downtrend.

MFG - has been in a strong uptrend for ages, but it took a breather and retreated to just below its 50 day MA. Entry point would have been end of April when the MACD went positive, and the stock price crossed back above the 50 day MA ($6.94 - $7.14)

Attachment 4518

Another great example is SIV - entry point is end of February ($5.90 - $6.28)
Attachment 4519

3. When to SELL
The first warning is when the share price drops below the 50 day moving average and the MACD turns down. This should put the stock on a watch list - its either a good time to top up, or a sell signal is going to be coming up shortly. If the price drops below the 200 day moving average I usually sell (I say usually, because its not uncommon for traders to try to drive the price down that far in order to trigger a bunch of stop losses, so you need to watch out for this little trick as often the share price rebounds immediately. IIN and CSV are good examples of this manipulation). If the "death cross" occurs (where the 50 day moving average crosses below the 200 day moving average, this is a signal that the downtrend is now firmly established).

ALQ - I bought into this thinking it had turned the corner and was heading back into a strong uptrend. Alas it was not to be, and in mid-March an exit was signalled ($10.50 - $10.80). Even though the price has rebounded recently, its still a death cross situation, and its more likely than not that the downtrend will continue for a while.
Attachment 4520

I hope others find this useful - its how I make decisions at the moment, its very simple, but pretty effective. Its part of my "get rich slow" investment strategy :-) If anyone else has any examples of when they enter or exit, then please post them.

Was looking for this excellent charting advice from KW so putting it up there again. One question am i right saying the 50/60DMA can be below the 200DMA but still in an uptrend sometimes or am i being a bit thick?

[samoooli]

Hi Guys,

Found this article a good read to understand how the smart money tests supply. I think it fits in nicely with the volume and price indicators discussed.

http://stockcharts.com/school/doku.p...f_market_analy

S

[skid]

Its frustrating how direct broking charts dont allow you to use the 50-200MA (closest I guess would be 30-180)and their normal default chart is 30-100 which when compared to the 30-180 (in the case of PEB) of course looks totally different--In the default 30-100 the 30day ma has crossed above the 100day MA for some time (over a month) and with the 30-180 it is still well below.

[samoooli]

KW (or anyone else) - Would you be able to comment on how you go about buying into a share already in an uptrend?

For instance I am looking to get involved in AJX - A few TA points for starters:

- A pullback to the last support? (31c~) or to the 50MA - I dont know if or when this will happen in the short term (think LNG march-mid april 2013)
- RSI moves back to a median position (45-60)?

Alternatively, do you take these types of scenarios more on a case by case basis ie a stock has gone on a tear in the last 30 days , or a disruptive technology emerges and it is wiser to base entry on the confirmation of anticipated FA event(s) (such as a new contract coming to fruition, legislation passing to embrace said technology).

OR

- do you think Im off my head and getting to wound up in the hype and recent surge in the share price..

Appreciate any insight or constructive criticism.

S (a newbie)

[Hoop]

I don't exactly know where to post this chart...As Fibonacci is a TA discipline (of sorts) this thread is probably the best place..
Unfortunately I have only discovered the WHS share price correlation with Fibonacci discipline,,,,,,,,,,,,,,,

rest of post deleted

[Mista_Trix]

Hey guys. I've been using the 50 EMA crossing through the 200 EMA lately as an entry point, which has served me really well on many stocks over the past year or so.

However there are some where I clearly need to combine other indicators, examples of these are EBO, TME and DIL. I got whipsawed in and out of EBO at the begining as its moved sideways for quite some time, and although I didn't end up going in to TME (the p/e put me off - slowing growth company, non core acquisitions and high p/e), that also turned back below the 200 EMA. One more is DIL - crossed above, then below, then above again - I went in, got out, then went back in... and stayed in.


I'm just wondering what kind of indicators you would combine on top of this to help identify (earlier) the stocks that are not at a point of correction and are instead about to track sideways for a while, giving false indicators as they do. I've looked at PSAR but again, can give false indicators.

Any help appreciated, and cheers for the commentary - always a good read

[Snow Leopard]

You do not seem to be getting much traction on this one MT (no relation).

To clarify here is a pretty picture for DIL that covers the period in Oct-14 when the 50day and 200 day EMA's were intertwining with each other:
Attachment 7139
Is this what you were referring to, with respect to your buy, sell & buy again?

Best Wishes
Paper Tiger

[Snow Leopard]

...I dont see the EMA's crossing several times in my chart (?) - ...

I can see convergence between your EMA200 and mine as time progresses:

So as a matter of interest KW, if with whatever you use to draw those graphs -
if you choose a 2 year width (2013-2015), is the EMA200 for the second year (2014-2015) the same as the EMA200 when you choose a one year period (2014-2015).

Best Wishes
Paper Tiger