Forum Archive Index - July 2000

["Brent" <brent-g@ihug.co.nz>]

If one spends a little time considering simple price/ volume charts and company prospects i.e.. fundamentals, Its indisputable that price is an emotional rather than logical response by the share buyer. If this was not the case, share prices would not bounce all over the place ,as they do, in such a relatively short period of time. Clearly the fundamentals of a company are not so erratic.

 

Price charts that show a steady  linear rise over a period of time eg. feg, fru, whs flb will nearly allways be followed by a decline. This happens 90% of the time, There is the odd exception such as bch. This type of price appreciation usually takes place over a period of a few months and is very easy to see on the above named charts. The trick is to detect this trend a week or two after it has started to develop. This avoids getting invloved in the false starts. The second trick is knowing when to get off, this is usually not to hard either as the declines are also usually linear rather than sudden.

 

You don't need to spend any time studying the company (apart from the daily news items) as it is either in play or not in play. if its not in play why waste your time and tie up your money for wishfull thinking as to what may or may not happen some time in the future. There is nearly always one or two companies such as the ones listed above that are in play.

 

The converse of this is also true. When the charts are showing a linear downward price trend, it's nearly always followed by an uptrend, but don't buy until the uptrend is clearly established.

 

Be wary of the quick spike up ie .flavour of the day, it's nearly always followed by a quick fall within the week.

 

Fundements or charts? ........ Fundamentals are usually pie in the sky,  The charts tell me what is happening now.

 

BWG