I will also tell you that I inevitably want to buy the stock, when I see one of these steady one year declines. It's just an emotional reaction I have to those charts. It's not that I actually know that a stock with that kind of one year chart is a good buy. I don't. I do suspect those stocks are going to go up, and go up quite rapidly, all the way to their one year highs, and perhaps beyond ... but I really don't know that. I really don't actually know what they are going to do.
That's the thing. The chart shows me a pattern that gives me a strong "feeling", but it doesn't show me anything that would confirm that feeling. It shows me a pattern I like, but it doesn't show me "what happened next".
One thing I could do, and it's something I'm working on, is to create a system that lets me watch a selection of stocks that made, in their one year charts, at a certain time, a pattern of the sort just described. I would want to preserve an image of the chart as it was when I had a feeling about it, and place, on the same page, a chart that updates as time goes by. Then, after time has passed, I could review those charts and see how the stock did. If I did that for a while, for a good number of patterns, I guess I would get a sense of whether the charts I had a feeling about actually were poised for good moves, or whether my feeling about that kind of chart was not, in fact, ... whether it was just a fantasy.
Thursday, August 6, 2015
4
Another kind of chart I see quite often is a chart which shows a full year of steadily declining prices. Here's another bit of background information: the list my software works from is a list of stocks that were, a few months ago, trading at low prices - basically, they are penny stocks, or, certainly, they were penny stocks, when I compiled the list. I ought to add that they are, or were then, trading on a major exchange - the NASDAQ or the big boards. None of them were OTC stocks. In fact, if they are now off the major exchanges, I won't get a chart, even if the stock is still on my list. It is not, I'll also note, that I am averse to trading OTC stocks. It's just a result of the way I built the software. But it's true I chose to build it that way in part because stocks trading on the major exchanges are likely to trade somewhat actively, which is helpful.
The point, though, is that they are penny stocks - unless they've gone up a lot since I put them on my list - and penny stocks tend to "move a lot", compared to pricier shares. This mean that when I see a chart that shows a steady one year decline, it is quite likely the stock is trading, at the end of the year, at one half its price at the beginning of the year, or at an even smaller fraction of that price.
The point, though, is that they are penny stocks - unless they've gone up a lot since I put them on my list - and penny stocks tend to "move a lot", compared to pricier shares. This mean that when I see a chart that shows a steady one year decline, it is quite likely the stock is trading, at the end of the year, at one half its price at the beginning of the year, or at an even smaller fraction of that price.
3
I guess I'll describe my software in slightly more detail. It is loaded with a list of stocks, and it shows me the latest one year chart for the first stock, and then I can click the "next" button and it shows me the chart for the second stock, and so on. It's a long list, so I can basically go from chart to chart, from stock to stock, for a long time.
When I do this, I see "patterns", shapes in the charts, and I can to some extent describe several types of patterns that I inevitably notice. For example, I always see some charts that could be described as having no pattern - the one year price action looks rather indistinct, rather fuzzy, like a sheet of gauze. I tend to think, actually, that these might be significant in a certain way, but I would need to look at another chart to tell for sure. My software will only show me that one year chart, so to get another chart I would need to go to the Web, which is easy enough, but just difficult or tedious enough that I actually will never do it. This is a shortcoming of my system, but until I can correct it, maybe I'll satisfy myself with the one year charts, which sometimes show me these fuzzy patterns, but at other times show me patterns that are much more distinct.
Just keep clicking that newer post link, and you can work your way through the whole blog. I guess I really shouldn't repeat this on every post.
When I do this, I see "patterns", shapes in the charts, and I can to some extent describe several types of patterns that I inevitably notice. For example, I always see some charts that could be described as having no pattern - the one year price action looks rather indistinct, rather fuzzy, like a sheet of gauze. I tend to think, actually, that these might be significant in a certain way, but I would need to look at another chart to tell for sure. My software will only show me that one year chart, so to get another chart I would need to go to the Web, which is easy enough, but just difficult or tedious enough that I actually will never do it. This is a shortcoming of my system, but until I can correct it, maybe I'll satisfy myself with the one year charts, which sometimes show me these fuzzy patterns, but at other times show me patterns that are much more distinct.
Just keep clicking that newer post link, and you can work your way through the whole blog. I guess I really shouldn't repeat this on every post.
2
The list of web sites that will provide a person with stock charts is quite extensive. You can quickly get a variety of charts for any listed stock. One site will provide you with a chart that shows pretty much as many years of the history of a stock as there are to show, up to many decades of history, if the company has been in business for a long time. You can then zoom in. Perhaps the initial chart showed fifty years of history. Now you can look at the last twenty years of history in more detail, and then at the last ten years, and then at the last five, and then at the last two. Now a pattern which was just a small fluctuation, a blip or tremor, on the fifty year chart, appears as great waves composed of many daily price points. And this only introduces the variety of charts you can look at for a given stock.
Going to web sites for charts can be problematic, though. It depends on what we want to do, or what we seek to accomplish. What I want to do here is look at certain selected stock charts that contain certain kinds of patterns. For that purpose I've assembled a program that shows me charts in a certain way that is not readily available otherwise. I'm not going to describe this in detail, but you need to understand that my software draws me a one year chart, of whatever stock I happen to look at a chart for, and that's it. Incidentally - I don't know how important this is, but I'll mention it - the software draws the latest chart at the moment I draw the chart. What's important, though, is that it draws me a one year chart.
Please proceed to the "newer" post.
Going to web sites for charts can be problematic, though. It depends on what we want to do, or what we seek to accomplish. What I want to do here is look at certain selected stock charts that contain certain kinds of patterns. For that purpose I've assembled a program that shows me charts in a certain way that is not readily available otherwise. I'm not going to describe this in detail, but you need to understand that my software draws me a one year chart, of whatever stock I happen to look at a chart for, and that's it. Incidentally - I don't know how important this is, but I'll mention it - the software draws the latest chart at the moment I draw the chart. What's important, though, is that it draws me a one year chart.
Please proceed to the "newer" post.
1
The premise for this blog is that patterns, shapes, which appear in stock charts, may have predictive value. These shapes represent events in the stock market, in the market for one or another stock. One day people bought the stock at some price, and other people sold the stock at that price, and another day people sold the same stock at twice that price, and other people bought it from them at that price. Things like that.
Assembling a sequence of such events, we might see the going price falling, for a period of weeks, then jumping upward for a few days, or even just a day, then gradually falling day after day for many weeks, extending into months. When prices initially fell, and then jumped up again, a bottom formed. That's a shape in the chart, and it represents a period of time during which the stock traded at some low price, preceded by a period of time during which it traded at various higher prices, and followed by a period of time during which it traded at higher prices. The bottom has a level in the chart, and there is a price associated with that level. After the price jumps up, and begins to fall again, a top forms in the chart. It is a shape in the chart, associated with a price. As prices gradually descend again, they again approach the bottom, and then they begin to climb again, and eventually they return to the top.
It is best, I think, that a post not be excessively long, and I'm wary of pages with many posts on them, too, so I'm setting up this blog to show one post at a time. If you would like to look at a long page with many posts on it, you can do that by clicking one of the months - or perhaps even a year - in the blog index in the right hand side bar. For now, look for the "newer post" link, below, and click that to see the next post.
Assembling a sequence of such events, we might see the going price falling, for a period of weeks, then jumping upward for a few days, or even just a day, then gradually falling day after day for many weeks, extending into months. When prices initially fell, and then jumped up again, a bottom formed. That's a shape in the chart, and it represents a period of time during which the stock traded at some low price, preceded by a period of time during which it traded at various higher prices, and followed by a period of time during which it traded at higher prices. The bottom has a level in the chart, and there is a price associated with that level. After the price jumps up, and begins to fall again, a top forms in the chart. It is a shape in the chart, associated with a price. As prices gradually descend again, they again approach the bottom, and then they begin to climb again, and eventually they return to the top.
It is best, I think, that a post not be excessively long, and I'm wary of pages with many posts on them, too, so I'm setting up this blog to show one post at a time. If you would like to look at a long page with many posts on it, you can do that by clicking one of the months - or perhaps even a year - in the blog index in the right hand side bar. For now, look for the "newer post" link, below, and click that to see the next post.
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