What is the basic premise for stock analysis? Find the positions that have the biggest potential! Most stock analysis is done through fundamental research. Analysts base their stock analysis upon potentially improved earnings over a specific period of time. This is how most MBAs are taught as far as the basis for stock analysis. Unfortunately, there is one major flaw with this approach. The fundamental elements may be pertinent today but may not be important in six months from now. This becomes the biggest risk for long-term stock analysis. In years past, the fundamentals of a company could be anticipated for the future based upon one fundamental projection. The technology of that company/industry was not likely to change very fast. Until recently, meaning the past decade, the technological improvements of most industries was relatively slow.
That is not true today. Stock analysis today has one major additional criteria. What are the technological improvements in that industry capable of doing in the near future? The near future could mean anywhere between three months to three years. What might be a viable advantage for a company today, with the announcement of improved technology, could be completely negated in mere months if new technology enters that market. We are living in a technology boom. Investors may have seen the bubble back in the early 2000’s but that was a bubble in technology stock prices, not technology itself.
Candlestick signals help exploit reaping large profits from markets that are technology driven. The 12 major signals become dominant factors for identifying new investor sentiment coming into a stock position. It can be assumed that the smart money, the money that is closely following specific companies, starts creating candlestick buy signals well before a major announcement occurs in a company. Most investors do not have the capacity to follow what every single company in the market is doing. Fortunately, the candlestick signals can monitor when something is happening in a company. The 12 major signals have an immense amount of information built into their formations. Click here for information on the 12 major signals CD training package. Adding that information to ‘recognized’ trading patterns creates an even more powerful investment platform. Investors trade in patterns.
Patterns reveal an immense amount of information. Utilizing candlestick signals with a few investment patterns can dramatically improve an investor’s portfolio return. This is not rocket science. This is visually analyzing high probability situations.
Big price moves – a simple dissection of the term ‘pattern’ makes understanding how to participate in big price moves much easier. A pattern is something that can be recognized. That recognition usually includes price movements that have occurred many times in the past, thus forming a pattern. Successful stock analysis utilizes what has happened in the past. Applying candlestick signals to a pattern makes the probabilities of a successful pattern performing that much more compelling. As illustrated in the Adolor Corp. chart, a fry pan bottom pattern could be easily recognized. The fact that there was much indecisive trading during the formation of that pattern, with doji’s, spinning tops, small hammers, and inverted hammers made recognizing the fry pan bottom that much easier. A small belt hold signal bouncing off the 50 day moving average became more evidence that a new uptrend was going to start. This signal occurring at the end of a fry pan bottom pattern made the probabilities that much greater that a strong uptrend could occur.
