By: Joe Taylor | March 3, 2009
JM: To start off, I’d like to thank Better Trades for introducing my blog, Stock Chartist, to your community.
JM: I started blogging while staring out on the water at a rented vacation house on Martha’s Vineyard July 4, 2005. So, if my math is correct, it is just over 4 ½ years ago. I had just recently ended a long career in financial management with several companies that were leaders in their industries and, for the first time, had the opportunity to indulge my avocation, the stock market.
JM: As a teenager, I came across Edwards and Magee’s foundation book on charting, Technical Analysis of Stock Trends, made a lasting impression and gave me life-long passion that began with manually charting using as tools the daily newspaper, pencils and some special graphing paper.
Through the years, I’ve always had to defend my belief in charting as an investment tool; most put it on the same level as astrology. However, I always thought it was a discipline that was poorly explained and articulated and, when I finally found the time, decided I should be the one to explained and teach the basics.
JM: What makes Stock Chartist unique, I believe, is that it not only presents charts on stocks, industries and indexes but also explanations of and education about the reasons for the conclusions that I, as a reader of charts, draw from them. Some of the themes that thread through my many blog postings include:
All are encapsulated in the title of an upcoming book called “Running with the Herd”.
JM: With planning for and managing retirement assets becoming ever more the individual's responsibility and seeing how poorly professional management has performed during this past bear market with everything from underperformance to outright fraud, I believe it's going to be increasingly more necessary for all of us to become more involved and find easy and effective tools and techniques. The average investor doesn't have the training or time to do perform extensive fundamental analysis. I believe a better strategy is to piggyback on where we see the pro's (what I call the "herd") putting their money, follow their tracks and run with them. And, we need to get out of the way quickly enough when they change directions so we don't get trampled as they abandon a stock, an industry or the market in general. I firmly believe charting is the technique to enable us to to that effectively and efficiently.
I've heard from many readers that they learn a lot from my blog. They like my unique and early insights and the thoroughness of my explanations. Hopefully, I've also been able to save them a lot of money by my calling for my readers to move to cash throughout last year starting in February. Furthermore, I hope to make them money when it is time to get back in the market by giving them ideas about timely momentum-driven investments.
JM: According to my dictionary, “edgy” means “sharp-edged; sharply defined …. daringly innovative; on the cutting edge.” If I can select, I’ll go with “cutting edge”. Yes, I’d like to be the first to call a trend, identify a momentum-driven industry or stock. Readers may not get it at first but I follow-up and refer back to earlier “cutting edge” postings.
JM: Absolutely. If I’m right, that will put money in my readers’ pockets because they’ll be getting in at lower prices or out at higher ones.
JM: I’ve been wanting to write a book about stock charting since I wrote a college term paper about technical analysis in a business school finance course. When I finally found the time, blogs were just coming on the scene. I decided an easy way to jump start the project was to write a blog with some of my ideas. The blog took on a life of its own and two years ago I started compiling the best ideas from the blog into my book, “Running with the Herd”.
If you’ve never written a book, and most haven’t, it’s an amazing project where you often wind up nowhere near where you thought you would when you started. I thought I was finished with the book towards the end of 2007, just as the financial crisis was starting to unravel. I realized I needed to add something about knowing when you needed to sell. It forced me to do research and opened up a totally new understanding of synching charting techniques to the market’s life cycle phases. It allowed me and my readers to get totally into cash in February, 2008 and to remain essentially out of the market until now.
JM: My defense of stock charting is very personal. It began in college when my roommate and I had heated arguments about fundamental vs. technical analysis. He’d ridicule me for the hours I spent copying closing prices of 300 stocks onto graph paper. I thought he was wasting time studying annual and quarterly reports. By the end of the school year we were sharing a dorm room but not on speaking terms.
Times have changed. You can’t escape looking at stock charts on TV, in print, on the Internet. It’s gotten to the point where some today believe that a technical approach is more relevant than fundamental in times of crises like we’re going through today.
JM: I love to interact with my readers and welcome their comments, questions and suggestions.
JM: I started trading when I was 16, made enough money to help pay for living expenses in college and have been trading ever since. Having learned my lessons of the Tech Bubble Crash in 2000-03, this time, though, I’ve been almost totally out of the market (no less than 80%) for over a year.
JM: With the growth of ETF’s, it’s easy to trade everything today. I’ve decided to avoid options due to their time dimension.
JM: Call it momentum or swing trading.
JM: Depends on the life cycle phase of the market and the quality of my stock selection. If in the market’s early phase, I’ll plan to hold on to a position as long as possible, preferable months or years. Late in the life cycle it could be weeks.
JM: Read blogs and books (like mine when it finally comes out; it’ll be available on the blog).
JM: Being impatient.
JM: I wish I were young because the market is approaching a once in a lifetime opportunity to buy the stocks of great companies very cheaply.
JM: I don’t predict the market. I let the market speak for itself and tell me when the risk of owning stock is reduced enough to assume the risks.
JM: My technical analysis involves charts, trendlines and moving averages. Sometimes, I also use OBV (on-balance volume) and RSI (relative strength). Because my trading time horizon is relatively long, I don’t feel the more traditional indicators like MACD, Stochastics, Balance of Power and Moneystream are applicable or effective.
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