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Author: leaderoftheback Three stars, 500 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 320  
Subject: Please, believe in charting Date: 12/12/2012 9:18 AM
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Hey all!
I've been chewing on this in the context of my own portfolio results and here's the thing:

Charting won't tell us a lot of things that we want to know; it can't tell us anything about a company's core competency, its financials, or indeed, whether a company is a good bet. However, what it does do is impart a sense of proper timing and an edge on percentage share price growth.

Up until about a year ago, I would decide to pull the trigger on a buy, pull it and wait for the dough to roll in. Almost every time (possibly every time) I could have gotten the stock for quite a bit less money...sometimes 5-10% (AIG), sometimes well above 10% (DF, IPGP). I don't beat myself up about these things (those three noted are all well in the money), but when long term, 10% growth would be thrilling, why leave 10% on the table if I don't have to?

Here's a practical and simple example of how it might work: take JOY. I just noticed a Bloomberg article today, remembering that I'd looked at Joy before. hmmm...it is well off its 52 week high; a quick peak at the chart and I see that it's bottomed before around $49. Whatever happens with earnings (barring extraordinary news), chances are good that JOY will approach $49 again. So I decide to throw a CAPS limit play on JOY at $49. But I can't because sometime (in the distant past) I already put a CAPS limit in at $49.85. Well then, at least I agree with myself. Joy appears to be a solid well run company, so the only reason for it to go down is sentiment (caveat- as far as I've looked, in this case). Sign me up.

It's impossible to know if JOY will "fill" at $49.85, but if it does, my odds are a lot better for positive points than yours if you pick it on today's news, whatever the close.

Another example, I put a $4.69 order in on INFN, which did ultimately fill...not at its exact low, but hey, close enough. My guess is that it will retrace to around $5 before the next earnings report. I have a limit in for another load at $4.99. If it fills, great. If not, that's ok. There is never any hurry if you think it's a good company.

Please check the INFN board to see a little more on that. And congrats to Spiffypop- he got his INFN even cheaper than I did (and ZIP, too). I'll bet he consults his charts.

Charting goes hand in hand with patience, and of course solid research when it comes to your real life choices. It is equivalent to chicken guts on its own.

-Randy
who isn't paying a lot of money for that stock!
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