Apple (NASDAQ: AAPL) performed just as its chart implied it would -- a clear path from $140 to $160, but no more. Score one for technical analysis!
I noted that while Research in Motion Ltd (NASDAQ: RIMM) had a solid base, a ton of overhead resistance would prevent a big breakout-bingo, another perfect call -- no matter that it wasn't actionable -- the stock's barely higher now, just like the Nasdaq market as a whole.
The very day my original article came out, Priceline.com Inc (NASDAQ: PCLN) did indeed breakout to a new high, but ever since it's done exactly squat. Hmm, was this a self-fulfilling prophecy -- somehow I can't quite claim victory here, although its definitely not a defeat.
Amazon.com's (NASDAQ: AMZN) chart pattern was rather bearish, but I wasn't going to short such a strong company whose business model I loved (that is, until they became a monopolistic bully to print-on-demand publishers!). Since then, the stock's flat, so this was another good non-actionable call, as was my call not to short another well-known technology play with an overwhelmingly bearish chart, Google Inc (NASDAQ: GOOG).
Perhaps the best non-actionable call was to avoid the hotly debated satellite radio twins Sirius Satellite Radio (NASDAQ: SIRI) and XM Satellite Radio (NASDAQ: XMSR). Despite being blabbed about by every major financial blabber, their charts prove just how uninteresting they are -- as investments -- and this is just the latest proof that charts are more trustworthy than humans ever will be.
But even charts aren't perfect and the head-and-shoulders pattern that led to my bearish take on Baidu.com (NASDAQ: BIDU) was the only real mistake of this entire list, as its stock surged 15% higher (although I did say short on a bounce, not before).
All in all, one perfect call, one miss and the rest demonstrate good avoidance -- too small a data sample to conclude much, but one thing is certain: if you follow the charts -- not earnings, analysts or cheerleaders -- cut your losses quickly and let your winners run, you can never get hurt very badly. And that's hugely important to beating the market --trust me I know, I made 21% in the first quarter this year!
Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund
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Reader Comments (Page 1 of 1)
4-14-2008 @ 11:51AM
Sheldon L said...
Technical analysis is something to use as an overlay system when reviewing a broad range of data. It is not a reliable method of stock picking by itself. To imply anything else is highly suspect or you would be able to mint money. Perhaps the operative word here is trading, as oposed to investing.
Have you been minting money? The SEC, and Treausry will want to know about this Tim.
;-)
4-14-2008 @ 11:54AM
tim said...
Yes I have been minting money--you forget I used this "overlay system" to make over 135x my original investment in 4 years...without using any leverage whatsoever. I encourage you to read my blog and watch me repeat my feat, so you can better understand that TA works particularly well with microcaps and smallcaps, considering they have no fundamentals!
Tim
http://www.timothysykes.com
PS Bring the SEC, Treasury, FBI, whoever, my entire track record is audited
4-14-2008 @ 12:03PM
anurag phadke said...
Bingo. Technical analysis coupled with common sense wins hands down for the short term. Yahoo Historical Charts provides one with tons of data needed to build your models. One can use "EquiVolume Pricing", mash it with PUTS/CALLS, and hedge it with stock from same sector. The hedging limits your profits, but more often than not (68%+) you end up as clear winner.....
-ANurag
4-24-2008 @ 6:27PM
Beltway Greg said...
Apple did indeed go higher and Goldman has gone much higher. While you're screwing around with penny stocks and inventing data I'm making real money. Okay rich man, let's try the Beltway Greg Challenge. The history. Last year I challenged Richard Gardner from Citi to a $1 million dollar bet that Apple would not finish the year below $115.00. (Citi downgraded it on valuation last spring at around $115.00...actually that explains alot.) I predicted $200. It reached $203.00. Most recently, I challenged Peter Cohan the Babson Business Prof. Blogger to a $5K or IPhone, whichever he preferred, wager that Apple would reach $150 before it reached $100. The object is to ferret out the bullcrap. Now having instructed you to stop promoting your silly day trading fast money blog let's get in the proverbial ring shall
we? You pick two stocks; I pick two stocks. The winner gets? Whatever your comfort level.
Beltway Greg
4-24-2008 @ 6:29PM
tim said...
You my friend are a typical finance freak--you think it's about predictions, price targets and big $ gains...you and I both know my penny stocks aren't scalable and yet they offer a much higher dgree of predictability than AAPL, GOOG or GS ever will, especially on % terms. Long story short, my strategy is ideal for smaller investors who don't make much $ if they buy 5 shares of AAPL
Tim
http://www.timothysykes.com
PS As for your challenge, grow up, start a blog if you want to challenge me