Thursday, May 21, 2009

A. M. Post

I retired early as my internet connection was down since just past noon.  It came up briefly at 9pm and crashed shortly thereafter.  I went up to bed and picked up Mamis. In his book, the Nature of Risk, he devotes about 3 chapters to market language.  And in re-reading those chapters, it was a reminder that while technicals are helpful, nothing beats looking through a chartbook every night to watch how charts are unfolding in the face of the technicals--as in every market, it will unfold differently.

While market tools are readily available, there is a true skill.  Sometimes I think that it is a disservice to most investors to hold out the greats and say "You can be like this too if you do ...x, y, z".  Like putting oils and brushes to the masses and say that all can go from paint by colors to becoming a master of the canvas.   I've found my best picks from my mind-numbingly clicking through charts. Early a.m. with coffee.  p.m. with wine (I tend to blog at those times too which may explain alot!. 

Click, click, click---back up. And the one that makes you pause and look a little closer sometimes is 'the one' and sometimes you look and find a wart within a pimple with a hair getting ready to, click, click.  I do find lots of obscure stocks that way that go on to be quiet performers.  Sometimes they are rabid dogs that need to be shot and put out of their misery. But Mamis's comment really concretized the importance of looking at many charts and getting an intuitive feel for what is going on.

For those of you are working on your technical analysis skills, I recommend your getting Dan Fitzpatrick’s free video.  It’s just a few minutes, and he’s an excellent, gifted teacher.  His video prompted this post in that I read Mamis last evening and saw Dan’s video this morning. And if you take the time to LOOK at charts, really look at them, you’ll see ‘stuff’ unfold that is not in the media.


Here’s my update on WH that I did not have last evening due to the 5 minute window of my internet malaise.  This is a weekly chart.  I’m spending more time scanning using weekly charts—I’m finding that it gives a cleaner view….less noise.  The above chart is becoming my favorite view.  I can see the Bollinger Band width (the light purple line), volume and relative performance to the SPX.  The expansion in the BB is unsustainable, so I fully expect this stock to pull in. 

Back to Mamis… of the things that he noted that I wanted to share with you is that the leaders of yesterday will not be the leaders of tomorrow.  I had to think about that a bit particularly relative to energy, metals and agriculture which were the last leaders. 

I'm also listening to GaryK this a.m..  He’s talking about gold.  Here’s a chart of the GLD



I’ve been looking at this chart and see a potential double top OR a potential INVERSE H&S----so watch the $100 level.  I’ve still not gotten over my INACTION from the Thanksgiving’s work of looking at all of the gold stocks and not acting.  I’m reminded that study without action amounts to not much. And that goes to anything….hard work without achieving an outcome doesn’t amount to much either….we can look to our business life and see that as well.

That is another manifestation of risk….that you CAN work hard and NOT accomplish what you want (but surely you’ll accomplish SOMETHING if not only the practice of knowing what it is like to work hard).  That doesn’t mean that you don’t work hard, you must.  For if you do not work hard, you are unlikely to be successful, and if you do work hard you are likely to be successful—the degree to which is unknown, but surely higher than your choosing to NOT work hard.

Much like investing.  Some will put as much work into it as others.  A ‘few’ will be more successful than the ‘some’ just as surely as ‘some’ will be more successful than the many. Napier’s comment from the FT’s Long View particularly resonates…..He said (paraphrased), “I don’t have to forecast the future accurately, only slightly better than you.”  If you cannot be the best, it pays to be marginally better than others.  Sounds a bit like an underachiever’s mantra!

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