Forum Archive Index - November 2000

["Peter Maiden" <pmaiden@today.com.au>]

Graham - bought your SKY shares yet?

Last night I met up with my mate Simon who explained that price channel chart 
of SKY I was on about yesterday.

Some new Belgian pub in CBD Wellington. Pleny of Stella Artois and other 
unprouncable foreign beers. Plenty of people enjoying temselves and lots of 
money being spent. State of the country isn't too bad after all.

Simon at a look at the updated SKY price channel chart and said 230 is the 
price.

Simon said if I had my laptop with me he would show me something else. I did. 
Simon said "Hey man - must be something wrong with you - carrying 3 years of 
SKY price history with you. You must love that stock man"

Within minutes Simon had created a ROC chart for SKY. ROC being rate of change 
of the share price. Won't bore you with the details.

SKY has a ROC of 82 at the moment - Simon says that means you don't buy just 
yet. You have to wait until the ROC gets to 100 before you buy.

By now a Kylie Bax look alike (we later found out her name was Amanda ) had 
oveheard our discussion and started taking an interest.

Simon explained to Amanda that charting is big in USA.. So much so that charts 
drive stock prices. There are so many chartists that when a stock hits it's buy 
price on a price channel chart of when the ROC hits 100 on its way up they all 
jump and buy. That pushes the price up. When the price hits the stock sell 
price they all sell and the price goes down. People think that chart reflects 
the market activity but in a lot of cases the chart drives market activity.

Simon then explained that fund managers then stuff this surefire system up 
because they feel compelled to buy for no other reason than the price is going 
up etc.

Amanda was really interested in all this but Simon then gave her a good lecture 
and told her that she should select the stock she is interested in on more 
fundamental criteria. Then use charting methods to optimise the potential wins. 
Really good lesson in this.

Simon went through how much money we could have made following SKY and buying 
and selling when the charts said we should. Truely amazing stuff. I've lost the 
workings - or filed the workings away somewhere on the hard drive but can't 
remember where in the stupour of the Stella's and the excitement of it all . 
I'll find them and post the summary later.

However it can't be all that good because as we left Simon said 'mate - can you 
pick up the tab because times haven't been that good lately. I've had a bad run 
.... '

While I settled the tab Simon was last seen hopping into a taxi with Amanda. He 
said she was interested in seeing more of his charts back at his apartment ....

Peter

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