Chart Technicals?

Hi All, I have noticed a number of Saul Board posters make mention of using chart technical analysis to decide when to get into and possibly out of stocks.

I seem to be at a point where my personal timing has been pretty terrible and I was wondering if you could direct me to a good place to learn about how to better read and utilize charts?

I would also be interested in hearing what others think about this idea as I really don’t have any experience with it.

Looking forward to hearing from everyone.

All the best, Brian

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Technical analysis has so many tools, each with it’s own proponents. You might like to start with the websight. I like candlestick charts so Steve Nison is credited with bringing those type of formations to the western world. Many if not most chartists use 20, 50 and 200 day moving averages on their charts. Hope this might get you started.


Purely in a spirit of altruism: abandon this path! The game is not easy and trying to make it so is futile. Begin perhaps by reading every one of Berkshire’s Letters to Shareholders.

But I know you will not. Your eyes are already bright with imagined riches. Wall Street smiles and rubs its hands. Another rookie technical analyst! Yum yum! Their lips smack at the prospect of lucrative pickings. They even employ one or two! But remember, the poor saps don’t know that they get their salaries not for their abilities (a very good joke indeed) but for their encouragement… of you.

Don’t lose too much.


Meanwhile, back in the F/A Promised Land, F/A crystal grippers made offerings of many hours of study to obtain new priestly ranks and to obtain superior results for believing in the one true religion:



As mentioned has a lot of resources and I too prefer their candlestick charts. I start with the gallery view that shows daily, weekly and point-and-figure charts.

IBD has a website with some decent free “educational” content on the way they use charts in combination with fundamentals. It is clearly self promoting, but the link below…
They concentrate on base patterns and breakouts, as opposed to swing trades and minor patterns. The dogma is that if a stock has strong growth fundamentals, then you buy it on a proper breakout from a proper base.

If you are really interested buy O’Neil’s book “How To Make Money in Stocks”. It explains the important base patterns, price and volume, market timing, and the fundamentals of good growth stocks. A good read even if you never implement any of it. The system is tough because it forces you to really fight human nature, and like any other set of rules, if you start breaking them with fear, greed and impatience, you lose. It will seem easy when you read the book, but fear not, it is a lot of work and is not “easy”.

Notice how well Saul fights human nature. When he has a conviction in a stock, he will buy it as it is falling “knowing” it will come back. That can also be a hard thing to do as humans feel much more pain losing a dollar than missing out on making $2. Clearly his system works for him without concern of what a chart says.
Here is a recent note from IBD ( on WETF

WisdomTree Investments (NASDAQ:WETF) is building the right side of a possible base, but it needs more time to rise into the upper half. It’s just recently risen about its 200-day moving average, and its 50-day line is still below that. It would be a first-stage base by virtue of undercutting a prior base. It had three quarters of declining EPS before putting in two quarters of sharply rising earnings.
WisdomTree is the nation’s fifth-largest sponsor of exchange-traded funds. Its internally created indexes claim to outperform by weighting stocks, not by price or market capitalization like most ETFs, but by fundamental factors, such as earnings growth or dividend yields.
Wall Street forecasts a 51% EPS increase this year and a 24% increase in 2016. Both represent upward revisions.

Lots of fun jibberish…why is it a possible base? what is important about 200 and 50 day moving average (simple or exponential)? What is a first stage base and how many stages are there?

Here is one on LNKD:

LinkedIn (NYSE:LNKD) is another stock that has set up in a base, having already formed a handle with a 258.49 buy point. The stock corrected 40% while building a base, but has done so over 39 weeks, compared to 24 weeks for Universal.
LinkedIn also received a shot in the arm from an Oct. 29 earnings report that easily beat forecasts.
The stock gapped up and closed 11% higher the next day as it built the right side of a base.

Here is a sample IBD rating on LNKD (very highly rated for EPS, RS and other factors they consider)
Composite Rating 96 Pass
EPS Rating 95 Pass
RS Rating 89 Pass
Group RS Rating A+ Pass
SMR Rating A Pass
Acc/Dis Rating A Pass

And about Palo Alto
IBD a strong emphasis on price and volume action to indicate support from big buyers…

Tuesday’s session, in which Palo Alto Networks gained more than 6% in heavy trade and reached within an arm’s length of crossing a 189.82 buy point, clearly demonstrated institutional investors actively accumulating shares.
(For aggressive investors, the stock cleared a trend-line entry Tuesday. The buy point is around 178.)
What has been the overall picture of large investor activity in recent months?

There are at least two ways to answer that question.
Checking the quantity and quality of funds owning shares is a great first step. In this measure, Palo Alto (NYSE:PANW) passes with flying colors. As of the September-ended quarter, 919 mutual and hedge funds owned a combined 35 million shares, or 43% of the total share float of 81 million. (Executives own 4% of the firm.) That’s a nice jump from the 232 funds owning 19 million shares in the same quarter two years ago.

and ratings on PANW
Composite Rating 97 Pass
EPS Rating 99 Pass
RS Rating 92 Pass
Group RS Rating B- Pass
SMR Rating A Pass
Acc/Dis Rating B Pass

All that being said, don’t rely on a chart to make all your decisions. Saul does not and the MF services do not and they beat the S&P quite handily (unlike most mutual funds). Read some websites, read some books and when you reach 1000 posts on Motley Fool, think about using charts to support your decisions. Meanwhile, you will learn tons more from this board than any book or website you are likely to find :wink:


Thanks much Rob, How do you use this technical information? Seems like to me it might help me decide better when to buy or sell something that I’ve researched and like.

I’d be interested in your thoughts on the subject and thanks for the starting point.

All the best Brian

Thanks so much for all the great thoughts. I was thinking it might be something worth learning and sure don’t plan to use without my other research.

All the best, Brian

I’m afraid there is not a quick and easy answer to how I use T/A and this is probably not the forum to get into a protracted explanation of T/A. I will tell you that I do use candlestick charts, with 20, 50 and 200 dma, bollinger bands and the CCI along with VWAP. If you look up those tools you will get an idea of what each seeks to measure. Stock charts has a glossary, Youtube and Investopedia have tutorials too. I find T/A useful while others do not. That is fine since each of us has our own money at risk and each of us has to decide what is the best way to invest/trade. You will need to see how useful it is to you.
Good luck.



Look up volume profile analysis and behavioral finance stuff around sentiment analysis.

Look at different timeframes and keep it simple. Remember that you are looking at the aggregation of the actions of all people transacting in the market so look at charts as a proxy for what these participants are doing.

This guy writes a fantastic blog on it as well.

Anything takes time to learn, whether it be fundamentals, technicals, or any other analysis approach. You need to find the approach that suits you. Whatever combination of strategy and analysis that fits your temperament and helps you make money is key, but it is different for everyone.

Hey guys,

This board is for a discussion of stocks primarily on the basis of fundamentals. There are discussion boards that specialize in technical analysis, but a series of discussions like this could fill up our board. It’s a whole different subject! Would you mind taking this discussion to a technical analysis board? I’d greatly appreciate it. (A few closing posts to point out the TA boards would be fine). Thanks very much.



Look at the charts and see what you see…

leading stocks are in buying range and showing healthy accumulation as the market continues to edge higher. Yet despite signs of strong institutional support, all four cleared their buy points in mostly light volume, a negative. At least one showed stalling action soon after its breakout.
While the market is in a confirmed uptrend, the distribution count on both the NYSE and the Nasdaq has risen to 6 days, which may be behind the tentative action so far.
ServiceNow (NYSE:NOW) may be the strongest among those still within the 5% buy range. The IBD Leaderboard stock, which develops cloud-based software that helps companies automate their work processes, cleared its 83.62 buy point Nov. 4.

ServiceNow’s Accumulation/Distribution Rating, which tracks institutional buying (accumulation) and selling (distribution) over the past 13 weeks, is a robust B+.
The up/down volume ratio, which gauges investor demand over the last 50 days, is well above the neutral 1. Also, its relative strength line is near highs, indicating outperformance.
Blackhawk Network (NASDAQ:HAWK), an IBD 50 stock, also boasts a B+ A/D Rating, and its up/down volume ratio is 1.3. The provider of gift cards and other prepaid products is 3% above a 45.88 cup-with-handle entry despite a breakout in initially low volume on Nov. 23. Turnover later revved up some.

Cambrex (NYSE:CBM), another IBD 50 stock, cleared a 52.68 buy point of a cup-with-handle base Nov. 25. Despite a strong accumulation rating, it showed signs of stalling Monday, closing in the lower half of its intraday range in heavy volume.

Lithia Motors (NYSE:LAD), a car dealer that operates mostly in the West, is out of buying range from a 117.98 early buy point, but it’s still in range from an alternate 121.91 entry. Volume on the first breakout try was weak, but then came in strong on Nov. 18; that day, turnover jumped 57% above average.
Meanwhile, Opus Bank (NASDAQ:OPB) has suffered negative reversals as it tries to retake a 40.10 entry after a failed breakout. The A/D Rating is B, but the up/down volume ratio has slipped from 1.6 to a lowly 0.6 in the past six weeks.

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