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Our Performance
June 1, 2008: 32.25
June 1, 2012: 36.25
Our performance since inception: + 12.40%
Performance of S&P since inception: - 8.71%
June 1, 2012: 36.25
Our performance since inception: + 12.40%
Performance of S&P since inception: - 8.71%
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Information contained in this blog is not intended as investment advice. Posts do not constitute an endorsement, recommendation, or sponsorship of any company, security, or fund. No representation or warranty, expressed or implied is made as to their accuracy, completeness or correctness.
Author may have open positions in the securities and funds mentioned.
Author may have open positions in the securities and funds mentioned.
3 comments:
sb, please see our reply to your comment in prior post.
Snot,
I enjoy reading all your analysis and am trying to learn all I can about stocks. What type of moving average do you use to make your channels?
Robert,
We don't believe in magic numbers when it comes to moving averages, except for the 200dma which signals major changes in the direction of the broader market. Instead, we apply whatever moving average roughly touches the points along the bottom (or top) of a stock's movements. In other words, we use the average the stock seems to respond to, whether it's the 50 day, 40 day, or 43 day etc.
We don't use averages to draw the trend channel. The center line of the trend channel is called a linear regression line, and it is automatically generated by the computer. We use TD Ameritrade's Strategy Desk software for this, although many other charting programs likely have this function, too. The linear regression line simply takes an average of each day's trading and draws a straight line through them all. The tool we use automatically adds the top and bottom lines (the offsets), although this can also be done manually. If the moving average parallels the trend channel, then it gives it some validation. When you have a stock moving very precisely within the confines of a well-defined trend channel wherein the bottom line of the channel basically is right in line with the moving average that the stock seems to play off of, then a simultaneous and decisive break of those lines becomes a very significant event. For us, this signals a change in sentiment, and triggers a buy or sell.
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