"Student Announcement:
For many years now TechniTrader has been teaching students from all over the globe how to trade with consistent success. One challenge that our students have faced is that our teaching is for the US markets and our tools have been created for the US markets. Our Canadian students have repeatedly expressed that they would like to trade the Canadian Exchange and until now it has been necessary that they manually enter the TechniTrader tools into a charting program other than TeleCharts and track this market independently to find patterns for determining market condition.
By creating trading tools in MetaStock and Stock Finder our training is now available to students around the globe. We currently have chart templates with TechniTrader indicator setups available for both programs. We also have Stock picking scans available for MetaStock and continue to work on stock picking scans for the Stock Finder program. Also in the works is Market Condition Scans that will function as accurately as these scans currently do in the TeleChart program. This is a goal that will take time and patience but we are enthusiastic that it can be done.
Of course these changes can cause some concerns and questions about where our education is going and what these changes mean to you, our student. First thing to remember is, ‘if it is not broke – don’t fix it’. If you are using TeleCharts and intend on only trading the US Markets, there is no need for you to change anything.
If you are a student that is currently using MetaStock, we now have TechniTrader tools that can be imported and used in that software. There are different indicator setups than taught for TeleCharts because 3 of the indicators available in TeleCharts are not available in MetaStock (TSV, BOP and Money Stream). Martha has created and tested alternatives and these are what you will find in the TechniTrader setups for MetaStock. These indicators are not superior nor are they inferior to the TeleChart indicators. They are simply the best for using in MetaStock.
If you are a student that wants to trade exchanges other than the US exchanges you will need to use a software that charts these exchanges. MetaStock and Stock Finder are two such programs.
In the months ahead you will notice that we are doing webinars with a variety of software charting companies. Do not let this cause you any concern. Our first and always foremost effort is to teach every individual who wants to learn how to take control of their financial future.
Our goal is to become transparent across all charting software. This way you, the student, have control over what charting software you want to use. Of course this will take some time, but we are committed to reaching this goal. We will keep you informed of our progress and tool updates as they become available.
I was in one of those proverbial “business dinner meetings” late last night and inevitably the conversation turned to our guests stock investments. Her story was the same sad story that prompted me to agree to teach about the stock market many years ago even though I was already retired at the time.
She had invested $10,000 in a scheme a friend had come up with based on red light/green light trading system and the belief that the stock market was going to go into a nose dive in September. The novice trader was planning on short selling. The three “short sells” she could remember were AMZN, IBM and GOOG. My heart sank. I didn’t even have to look at the charts.
As always while Howard was carefully explaining a few basics about stocks, I was wondering how on earth I could get to people before such things happen. After a decade of trying, I still don’t have the answer.
Market Psychology
Right now the markets are very consistent in patterns. It may not seem like it but they are. The runs begin with quiet accumulation of weak or flat market days, which are followed by institutional traders moving in, followed by smaller and smaller funds rushing to buy on news.
News is a catalyst for the small funds manager who lacks a complete education and understanding of the markets. Many smaller funds do not have an experienced manager at the helm. These funds managers invest similarly to a small investor or uninformed novice retail trader.
All public companies are working hard to give the small funds and small investors the news they want to hear which is: rising earnings. Since these groups of investors cling to outdated methods of analyzing whether to buy a stock or not, such as the P/E ratio so cherished by so many, companies do everything they can to show up on their earnings release dates with rising earnings to report.
BUT their revenues are either flat or slightly down or very mildly up but not at the estimated levels. This is all quarter over quarter NOT year over year. Again, the companies are all catering to the smaller funds and small investment groups, and small investors who look at earnings and year over year.
The giant pension funds that move in quietly are concerned with a balanced growth between revenues and earnings. They know that if revenues are flat to slightly down but earnings are up that there has been manipulation of expenses which commonly are capitalized (sent to the balance sheet as assets) to create the illusion of an increase in earnings.
So the P/E Ratio is now looking great but is skewed due to the adjustments made to make the earnings statement look good to those who don’t know these facts.
What this does is it creates a growing energy from smaller investors and smaller funds to buy stocks and create a choppy upward trend with rounding tops rather that peaks and valleys.
We can expect that this uptrend will continue until it reaches heavy resistance and the giant funds begin to sell for profits. Since the novice and smaller funds investors believe that every year is a rally during the next couple of months, their buying may well produce what the news media will proclaim is a rally.
This may fuel more novice and smaller investors to jump in late to buy stocks before the end of the year to get in on the “stock market rally”.
The Dow 10,000 is a major price resistance level that if price sustains above, could also fuel more activity. This would create a temporary speculative energy during the later part of this year.
In other words: the current uptrend is being fed by the greed and lack of knowledge of the smaller funds, small investment groups, small investors, and small retail trader who drive prices up with their non-controlled, “at Market” and “limit” orders.
Smart money large lot traders are having fun. They are moving in on weaker days, and then enjoying the ride up. Fridays have become the standard profit taking day as small investors rush to buy on the dip.
As long term investors, you need to be vigilant with monitoring your long term investments. Flat revenues are not necessarily a reason to sell but they are a concern as usually flat revenues can easily begin to change to declining revenues which eventually become declining earnings as there is only so much that a company can do to make earnings rise when revenues are flat to declining.
Companies with flat to declining revenues are only going to be able to shore up earnings for a few quarters. Probably in the first earnings season of 2010 the true reckoning will occur and then we will see a correction phase..." Martha Stokes, C.M.T.
Member of Market Technicians Association
Senior Technical Analyst: Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses
Martha Stokes, C.M.T. (c) copyright 2009 all rights reserved.
Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader®, its instructors and or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader® and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader® is not a broker or an investment advisor it is strictly an educational service.