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Author Topic: How often do charts lie?
indytrader
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Question: As a relative newbie to the pennystock segment of the market, I'm curious to know how often proper chart analysis proves wrong -10%, 25%, more?

I'm not seeking huge gains in the sub .10 segment, but a return of 5-10% per month would be nice. I plan on swing trading.

Here's are my current stocks based on my chart analysis:

ONEV - Hold (in at .025 - could spike)
VRDM - Hold (in at .030 - out at .60)
FNIX - Sell (in at .0205, sell at .025)
MYNG - Sell (in at .030 - breakeven)

I bought the last two based on good corporate news - but not solid chart analysis. Obviously, the good news didn't mean anything, charts still look lousy.

Any thoughts?

Indytrader

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The views and opinions expressed here are solely those of Indytrader. Make your own decisions based on what's right for you and your money.

Posts: 323 | From: Indianapolis, Indiana | Registered: Feb 2006  |  IP: Logged | Report this post to a Moderator
lilpennypincher
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I love charts. But there are things that can throw charts right off...

A good PR or a group play will throw a chart right out the window.....LOL

I use them to show me the tops and the bottoms.
I love em' for bottom fishing....

Intraday charting is great for getting in and out quick.

IMO


Good luck!

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Lil,

Dont LOSE more than you can afford to invest....LOL

I'm buying low and selling into the run...

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DWE
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Reading a company stock chart is like a weatherman looking at a weather chart. Sometimes they can be accurate, sometimes make no sense and most of all, deceiving. However, I do believe my girlfriend lies more than any chart ever created. [Big Grin]

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"NEVER UNDERESTIMATE THE POWER OF THE U.S./CHINA CONNECTION"

SSTY & TPDI

www.suretrace.com

Posts: 3662 | From: The City of Angels, Beautiful Los Angeles, California | Registered: Oct 2005  |  IP: Logged | Report this post to a Moderator
T e x
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quote:
Originally posted by lilpennypincher:
I love charts. But there are things that can throw charts right off...

A good PR or a group play will throw a chart right out the window.....LOL

I use them to show me the tops and the bottoms.
I love em' for bottom fishing....

Intraday charting is great for getting in and out quick.

IMO


Good luck!

as Lil says, with pennies charts usually more helpful re exit timing; for example pennies are prone to pump n dumps: such spikes will show as an anomaly, after the fact. THEREORE, no value in prognostication...

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Nashoba Holba Chepulechi
Adventures in microcapitalism...

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Skyman
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I look at barcharts.com. Look at the top 100 and pick a stock that has a steady incline, not too steep of course. To get on the top 100 a stock has to be "graded" using many technical analysis's and therefore has as good a chance as any to continue in the same direction. Check the reports and news on the same site. I picked NXG, a gold and copper play. In at 2.01 and out at 2.13. I guess that's about as good as it gets.
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Ric
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Charts never lie because the chart is only a look at past events and if it already happened then the chart can't be lying about it.

A better question is reading charts always correct and the answers is absolutely no. The study of reading charts has everything to do with past trends and market pressure. Now in a perfect world with no outside interference the chart would be right every time but thats not life especially in the penny market.

News effects outcomes, whether it is world news like during 9/11 or company news. Group plays, insider trading, hype, manipulation, and the unknown as with pinksheets. Dilution is a major cause of inaccurate charts in the penny market. It is the hands on biggest problem.

But some of that plays on all stocks as well but saying that sometimes they act just like they supposed to. You should learn to read chart if not for telling you when to buy but more for telling you not to buy. I think that charts are more accurate on telling when not to buy then when to buy but then to there is always the hype. Just remember hype is brief and the price almost always goes back to where the charts said it should have been. If you don't know nothing more then RSI and Bollinger you will be better off.

Saying all of that, I love charts. It doesn't make my decision but it does influence them.

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Invest with your brain not with your heart.

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DDA
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I would like to go one step earlier in the process. In regards to chart reading : what are the best sources ? What do you prefer ? RSI, MACD, Candlesticks, etc.
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T e x
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stockcharts is nice & so is bigcharts; Bollies, RSI, Macd, and then moneyflow, vol. accum, or OBV.

Others can address candles...

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Nashoba Holba Chepulechi
Adventures in microcapitalism...

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Rbreb13
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quote:
Originally posted by Skyman:
I look at barcharts.com. Look at the top 100 and pick a stock that has a steady incline, not too steep of course. To get on the top 100 a stock has to be "graded" using many technical analysis's and therefore has as good a chance as any to continue in the same direction. Check the reports and news on the same site. I picked NXG, a gold and copper play. In at 2.01 and out at 2.13. I guess that's about as good as it gets.

You sold NXG? The financials for this come out on the 23rd and should cause a significant spike in PPS. JMO
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Forrestgump
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Chart speak by istself...Pumpers, Bashers speak for themself!

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AGLOCO
TakeTheInternetBac k
SlashMySearch

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permanentjaun
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Bollies, RSI, Macd, and then moneyflow, vol. accum, or OBV.

All the western technicals are great and should be considered.

What I am learning is that candlesticks are very important. Most western technicals are trends/averages and thus are delayed indicators. The second the trading day is done you can read a candlestick and make an accurate prediction as to what tomorrow will bring. At least, that goes to say you can with larger cap stocks. I haven't tried playing the pennies strictly technically yet.

Something that really needs to be studied are support/resistance lines and how many forms they come in. The more support/resistance lines you have converging at one point or area the more important that line is. Not only will that tell you if a stock is likely to reverse from that point, but then you need to read the resistance lines to determine if there is much room for it to run from the support line. What is the risk/reward? That is why a lot of people say it's easier for charts to tell you when to get out with pennies than when to get in.

There is a lot of sideways trading in the penny market. Look for the stocks that are getting all the attention for a few days and play them since the charts will be more valuable and you can hopefully be liquid with your investment. Matt

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Dustoff 1
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When trading fast moving stocks? I prefer a fast and reliable weekly chart, then move to hourly..

Sometimes ya just have to bite the bullit and jump in front a little,,,but that can be damn dangerous.

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DDA
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Any material (books, video's) you would advise me to read ? I'm bussy with candlesticks for the moment.
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