Technical Analysts - can you explain this 18% rise with charts?

[Steve C]

Hi everyone,

Just hoping the experienced technical analysts on here could demonstrate to me the power of good chart reading. I am beginner and have spent the last few months reading many books on risk management and positive expectancy and am now just starting to get into technical analysis.

I noticed GRY on 14/9/12 went up 18% in one day. There were no announcements that would have contributed to this. Could someone please take the time to show the beginners here any signs/indicators on a chart that would have given strong buy signals on the 13/9, if any?


I have attached a chart but I am not sure if it shows enough information.

Greatly appreciated.

 

[Joules MM1]

I have attached a chart but I am not sure if it shows enough information.

first

what is the discrepancy within the volumes ? which one is correct?.....

the line chart is a distortion, stick with the bars or ohlc

in this instance, the indicia is best suited somewhere else, allow clarity is the first key with data

 

[skc]

I noticed GRY on 14/9/12 went up 18% in one day. There were no announcements that would have contributed to this. Could someone please take the time to show the beginners here any signs/indicators on a chart that would have given strong buy signals on the 13/9, if any?

You can't always pick these. Yes you can find indicators that suggest a potential move, but unless you look across all stocks with the same indicator reading and analyse the chance of breakout occurances, you'd be just "curve fitting".

Re: no announcements. How about QE3 announcement + gold prices shot up? That's why all gold stocks went up that day.

 

[Joules MM1]

I have attached a chart but I am not sure if it shows enough information.

Greatly appreciated.

add to email

storyline


if indicia is an important part of your work, maybe, try looking at the lower time frames within the volume make-up, did most the buying occur at the open or at the close by large hands or inbetween, do you think weak hands were buying and keeping price high hence the following days when price immediately sold after a strong up-bar.....you may want to look into Twiggs money flow to get some idea or the accum/distribution make-ups.....

clear accummulation based on what, maybe part of the rise is on the back of gold a few hands taking advantage of that strength.....the move doesnt look sustainable to me from a trend pov but certainly can get higher in the immediate future......looks like a large tradeable interruption

the major capitulation volume followed by retest volume look classic enough but i think the low, so far, is likely to get retested again......the nature of the construct so far says an interruption to the major trend with strong resistance at 1.05 an impulsive break of that goes to 1.35 level

as the downtrend gets lower, that is the % of the decline widens (from 2.05 to sub .60), so the selling abates and larger pockets soak up the selling without having to chase for supply until they are forced to, still implying to me a short-term counter-trend opportunity......

what may keep the stock bouyed is simply it's analogous to the general market as displayed by the 2007 peak and the 2009 lows.....keep in mind that no one but no one wanted the mar 09 lows as displayed in the volume whereas now the volume suggests differently...

the question now is what is the confirmation signal of trend reversal, if any.....

the levels i've cited upside are standard ratios as i've found them .......i'm not a technical analyst, per se

 

[CanOz]

Nice bit of VSA there mate

CanOz

 

[tech/a]

Ill answer in detail tonight.
Adding to Joules answer and perhaps
showing a little different slant on conventional
VSA wisdom.
A good question and one which is being seen a great deal
of late.

The question of have to know if a break out of consolidation
is likely to continue into a trend is a good one. While we wont
know 100% we will have indicators which allow us to anticipate
a longer term move and put us in front of the train.

The crux is the (My) Premise that price is governed by SUPPLY
and NOT DEMAND.

More tonight when I can mark up charts and explain in detail.

 

[Steve C]

Thank you everyone for taking the time to reply. Some very good contribuitions, to make them most useful to myself I really need to do a fair bit more reading on technical analysis, indicators etc etc and come back and re-read these responses to make them of most value to me.

Tech /A - I look forward to your response tonight.

I guess the point of this thread was to see an example of how T/A can be used to pick a price rise the night before, if anyone has any other examples they can show on a chart and point out the indicators that resulted in a price rise the next day please feel free to add.

Thanks again,

Steve

 

[CanOz]

I guess the point of this thread was to see an example of how T/A can be used to pick a price rise the night before, if anyone has any other examples they can show on a chart and point out the indicators that resulted in a price rise the next day please feel free to add.

If that was possible to any profitable degree, would there not be a few hedge funds milking it death?

CanOz

 

[Steve C]

If that was possible to any profitable degree, would there not be a few hedge funds milking it death?

CanOz

I guess so CanOz - I understand the charts are never 100% and are just showing you trends and probabilities, perhaps I have overestimated the accuracy and ability of T/A.

 

[CanOz]

I guess so CanOz - I understand the charts are never 100% and are just showing you trends and probabilities, perhaps I have overestimated the accuracy and ability of T/A.

I think so, personally. To me, its only ever been a way to size, enter and exit a trade. There is ZERO predictability in TA IMO. A coin toss.

CanOz

 

[Steve C]

I think so, personally. To me, its only ever been a way to size, enter and exit a trade. There is ZERO predictability in TA IMO. A coin toss.

CanOz

So basically the only way to be profitable over time is to have a positive expectancy and using tight risk management to minimise loses and maximise gains. I guess that is why you can lose more than you win and make money over time.

 

[tech/a]

I think so, personally. To me, its only ever been a way to size, enter and exit a trade. There is ZERO predictability in TA IMO. A coin toss.

CanOz

Well if that were the case then

(1) Youd never get a technical system that was profitable.
(2) You wouldnt get discretionary traders making a consistent profit.
(3) Youve wasted a hell of a lot of time Can Oz

Its about anticipation not prediction.
Its about spotting a train,if its docked at a station like this was then you want to know
when its leaving (Most likely and thats the question here).
If its left you want to know if its going to keep going and what its slowing down and speeding up means in context to the overall journey.
You want to know if it starts reversing is it going back to the station and infact through it in the other direction.

If you (anyone not specifically Can Oz) cant tell this with some degree of accuracy and with a very very high degree of risk mitigation for the times you are wrong---then you are not a technical traders boot lace.

More tonight which I will also add to the technical analysis education thread.

 

[Steve C]

More tonight which I will also add to the technical analysis education thread.

Tech - I just discovered this thread, it is brilliant, Thank you.

Moving off topic slightly here... does anyone here simply buy and sell off announcements/news alerts? It seems at times this could also be a workable strategy if you are quick enough...

ie:
Doray secures finance for Andy Well start-up (Shares in Doray jumped by 11% to 78c in afternoon trade.)

Pegasus bolts on copper hits (SHARES in Pegasus Metals nearly doubled today after the company announced high-grade copper-silver-zinc sulphides at the Mount Mulcahy project in Western Australia.)

Is this feasible or is it usually all to late by the time us retail investors read these announcements/news alerts?

 

[tech/a]

Tech - I just discovered this thread, it is brilliant, Thank you.

Moving off topic slightly here... does anyone here simply buy and sell off announcements/news alerts? It seems at times this could also be a workable strategy if you are quick enough...

ie:
Doray secures finance for Andy Well start-up (Shares in Doray jumped by 11% to 78c in afternoon trade.)

Pegasus bolts on copper hits (SHARES in Pegasus Metals nearly doubled today after the company announced high-grade copper-silver-zinc sulphides at the Mount Mulcahy project in Western Australia.)

Is this feasible or is it usually all to late by the time us retail investors read these announcements/news alerts?

I wish I'd have thought of that!

-----jumping at shadows.

 

[Gringotts Bank]

If that was possible to any profitable degree, would there not be a few hedge funds milking it death?

CanOz

I tend to think that's not the case Canoz. I find patterns and trend lines very useful. The reason hedge funds don't (necessarily) use them is because they can't easily quantify the process or results, so pitching the idea to the boss is impossible. The boss wants hard reproducible facts.

If you were to give any chart to 100 chartists, there would be all manner of different lines drawn on it. This is very much an art. I bet my bottom dollar my lines are "better" than most chartists out there. Excuse me blowing my horn.

As for indicators, I agree they can't be used successfully. I've run hundreds of thousands of back/fwd tests on pretty much every single indicator and indicator combo I could find....often leaving my AB running overnight looking for answers that weren't there! I think you've done the same. Not that long ago I deleted something like 500,000 test results from AB's report explorer. And that's been done before on my laptops as well.

 

[CanOz]

how T/A can be used to pick a price rise the night before, ...

My comments were directed at this specifically. Sorry for the confusion...I'm aware that patterns can be used to indicate where an issue may break, reverse etc. But how on earth can you tell when an issue will rise or fall "the next day" is beyond me!! Sure there could be a possibility, but i think the OP was looking for something a bit more certain.

CanOz

 

[tech/a]

I tend to think that's not the case Canoz. I find patterns and trend lines very useful. The reason hedge funds don't (necessarily) use them is because they can't easily quantify the process or results, so pitching the idea to the boss is impossible. The boss wants hard reproducible facts.

If you were to give any chart to 100 chartists, there would be all manner of different lines drawn on it. This is very much an art. I bet my bottom dollar my lines are "better" than most chartists out there. Excuse me blowing my horn.

As for indicators, I agree they can't be used successfully. I've run hundreds of thousands of back/fwd tests on pretty much every single indicator and indicator combo I could find....often leaving my AB running overnight looking for answers that weren't there! I think you've done the same. Not that long ago I deleted something like 500,000 test results from AB's report explorer. And that's been done before on my laptops as well.

If this is true you need to understand how to construct a profitable trading method.

You certainly can construct a profitable system using indicators.

 

[tech/a]

Still strapped for time.

I hope these 3 charts are helpful.
Would like to spend more time on commentary but have to fly.
If you read in CONJUNCTION with Joules chart it should be a little clearer

 

[CanOz]

Well if that were the case then

(1) Youd never get a technical system that was profitable.
(2) You wouldnt get discretionary traders making a consistent profit.
(3) Youve wasted a hell of a lot of time Can Oz

Its about anticipation not prediction.
Its about spotting a train,if its docked at a station like this was then you want to know
when its leaving (Most likely and thats the question here).
If its left you want to know if its going to keep going and what its slowing down and speeding up means in context to the overall journey.
You want to know if it starts reversing is it going back to the station and infact through it in the other direction.

If you (anyone not specifically Can Oz) cant tell this with some degree of accuracy and with a very very high degree of risk mitigation for the times you are wrong---then you are not a technical traders boot lace.

More tonight which I will also add to the technical analysis education thread.

Most systems are 50% correct over the long haul, most good systems...yeah?

Correct, it's the money management that's separates the really profitable ones over time.

I thought that was your mantra tech?

Great charts, solid analysis too. There were several times when it could have broken out though. To answer the OPs original question "can you tell the night before?", not for certain, no.

But can you profit from this, sure. You can code amibroker to look for these setups, even trade guider may highlight this move in its scans....tech?

Nice train by the way...

CanOz

 

[tech/a]

Most systems are 50% correct over the long haul, most good systems...yeah?

Correct, it's the money management that's separates the really profitable ones over time.

I thought that was your mantra tech?

Great charts, solid analysis too. There were several times when it could have broken out though. To answer the OPs original question "can you tell the night before?", not for certain, no.

But can you profit from this, sure. You can code amibroker to look for these setups, even trade guider may highlight this move in its scans....tech?

Nice train by the way...

CanOz

Mantra no
Management will only help discretionary traders
Systems traders just follow the system.

Can you tell the night before.
In some setups yes you can --- generally continuation moves

But in THIS case no only anticipate.