Low Finance

Getting Technical

I’ve started reading up on technical chart reading and have started looking closely at a few key statistics. My strategy is to pick likely stocks for investing by watching the fundamentals like growth, the income statement and forward earnings and then investigating the charts for these stocks for buy/sell indicators.

My first foray into this last night netted me a number of stocks I thought should perform well. Some I’ve mentioned before. With commentary on what I saw by examing the Bollinger Bands, MACD and DMI, they are:

  • EEEE Educate, Inc. Strong downward trend right now. If I had it, I would be selling ASAP. Today it got a 9% haircut
  • PKTR Packeteer Inc. This stock looks like a turnaround opportunity but the chart says no. Sadly, I’m already in it, but not too deep. I looked for resistance and support lines and thought I saw one at $9.35. Today, it peaked at $9.23, so I’m still holding. I’ll sell Monday unless I see a trend develop.
  • SMSI Smith Micro This one looks weak on the technicals, but the earnings report from this week was so strong, I’m calling it a hold it if you got it. Otherwise, it would bear watching for a big run up once it reverses.
  • LBIX Leading Brands Another stock that looks like it is just starting to turn the corner but this one is giving huge buying signals looking at the Bands and DMI. The MACD is contrarian but might flip soon giving me an all clear to buy. I’m already in this one for a small position, but I’ll start adding when I see a strong move upwards.
  • ARD Arena Resources All signs say yes. The only thing holding me back on this one was the volatility as demonstrated in the high time premium options are getting right now. Could be a big winner with the right call option.
  • ORB Orbital Sciences CP This one is also looking like it’s headed up, but I’m worried that it will be headed for a dip soon. The ADX flattened out and the divergence value on the MACD is collapsing. I still took a position with some Aug 20 calls hoping to lock in a short term gain before it rolls over. I’ll know on Monday.
  • GTRC Guitar Center This one is looking nice because the price just ran up towards the top Band and the MACD is up and accelerating. The DMI is about to cross, but the ACX isn’t showing the stock as currently trending. I’m going to watch for the trend indicator to start heading north before I take a position here.

Pretty fascinating stuff. I looked back at some of my earlier trades and I can see where I goofed on some not so small losers.