What Does This Chart Tell You?


Charles Kirk (Kirk Report) has put up something a little bit sneaky, but which has important implications. Check it out and follow the instructions.

http://www.thekirkreport.com/2008/02/would-you-buy-t.html

This is really simple, but tells you a lot about some of the pitfalls and problems in market analysis and the creation of trading ideas.

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John Forman, author of this blog, has traded for more than 20 years, is a professional market analyst, and authored The Essentials of Trading. He is an active participant in trading forums, consults for trading related businesses, as published literally dozens of trading articles, and has been quoted in a number of books and in the media.
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  • http://billakanodoodahs.com Bill aka NO DooDahs!

    Not a darn thing!

    The old “reversed chart” trick may have some application with interest rates or with commodities, but since stocks have an inherent upward bias, it’s not as good. Note that two of the best-performing technical screens over time are the 52-week high and the 52-week low.

    Additionally, the spike up (down) at the new high (January bottom) would be bearish (bullish) on the chart. Without a good explanation for why this “stock” spiked up (down) 5% before closing down (up) for the day, I would be hesitant to say the chart was bullish (bearish).

    Kirk’s got a bit of the permabear in him. It shows in his commentary.