October 20th, 2008

Readers’ Questions Answered

Some readers have asked some interesting questions that I need to answer:

  • Q: Since your explanation is based on the cross of 90 mva over the 180 mva, do you look at the daily or weekly chart? Based on FDO, QSII… they are weekly charts.

    A: I’ve been looking at the daily charts. Each bar on a chart represents any span of time (1-day, 2-day, 5-day or even a 9-day for extremely long time horizons, for example). The moving averages, however, are converted for the appropriate number of trading days (the 60-day MA is converted to a 30-bar MA on a 2-day bar graph).

  • Q: What is the reason behind using oil companies as an indicator? Would it be “normal” for them to reach the bottom of the channel before other sectors? Do they have a different time horizon in their outlook?
  • A: I only want to highlight a sector that I though might be relatively safe when I focused on the integrated oils. There was no intent for them to take on the role of “leading indicators”. I guess I fell back on combining technical and fundamental analysis by looking at some compelling charts overlayed by the strong cash position and earnings prospects of these stocks.

  • Q: I’ve used daily and weekly but never monthly. It seems to use a monthly chart you would have to be extrememly patient as each bar is 30 days. Which seems like an eternity to a guy who used to buy and sell 50 times a day… is it safe or okay to focus on one timeframe ? I’m looking for a process for TC2000.

    A: My TC2000 screen almost always displays 3 time horizons simultaneously:With the three simultaneous views, I can see not only what’s happening today but how short-term action might be potentially impacted by historical support and/or resistance levels and trendlines.

  • Q: I know we focus on the US but i’m curious in all your research if any foreign exchanges look better to you then the US. Japan? Brazil? Etc.
  • A: I don’t usually but it’s getting easier to do all the time with etf’s. There’s just to much to look at just here in the states but, if it looks like an clear and compelling opportunity opening up somewhere else in the world, I wouldn’t pass it up. In all honesty, I’d usually find these through press reports and “talking heads” rather than through scanning the charts.

Thanks for the questions and the support. It’s good to know that time taken is appreciated by others and not just an exercise to clear my head.

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