Charting/Technical Analysis

[rossef2]

Just wondering if any of you use charting or technical analysis for entry and exit positions? Candlesticks, Moving averages etc. I never really bothered before but I have often wondered if it would have help me buy into a stock without it dropping 5-10% the next day as usual.

[TwoCitiesCapital]

I will regularly look at a chart to determine what the range of prices are to determine where I want to set my limit orders for buys/sells. 

 

I also use things like Heiken-Ashi candles to determine probable turning points in names for transactions at the margin.

 

It doesn't mean I liquidate entire names based on top/bottoming patterns, but I may opt to sell near the money covered calls as we near a supposed top OR stop selling put spreads to reduce leveraged upside. Or buy calls near a supposed bottom. Etc etc etc. 

[gfp]

They will tease you about mentioning technical analysis on a value message board full of bottoms up purists but every investor needs to develop something that works for them - consistently - over a long period of time.  It's going to be different for every investor.

 

I grew up using technical analysis as a youngster.  Made the first bit of capital that I've lived off ever since by using the last two years of Tulane tuition money to buy Freeport McMoRan on a mix of technical breakout and the fundamentals of a gold (and copper!) bull market.  It was a multi-year saucer bottom.  I've always liked the multi-year patterns better than any short term stuff.

 

 

I used technical analysis for years as a youngster to sell iron condor credit spreads on the cash settled index options SPX and OEX.  The credit spreads were put on every month, giving the index a broad range to move around in.  You collected a credit spread above and below the market.  Max losses were multiples of net credit but capped.  I thought of it as an insurance company - just selling volatility insurance basically.

 

I still can't help but see the patterns even though I don't trade on technical analysis signals per se.  I use the ingrained stuff from my youth to set exit points, clouds of limit orders over a range of prices.

 

I had limit buy orders in for Chubb for a long time based on this head and shoulders pattern and the orders started to execute at the exact low (I wish more of them had executed) -

 

 

Recently I used a "bull flag" pattern to set my orders to completely exit a large position in MKTW -

 

 

Similarly, I am paying awfully close attention to Fairfax India because of the way the chart looks  (there was also a bull flag back in January that informed my selling decisions around my core position) -

 

And Bitcoin recently broke a fairly obvious down-trend line that was easy enough to see  -

 

 

 

And I still buy stocks at new lows with horrible charts.  Just the worst looking charts you could imagine.

 

 

Edited June 4, 2025 by gfp

[gfp]

A current example of a technical pattern breakout combined with "insider" buying from Robotti is Tidewater ->

 

 

https://www.dataroma.com/m/stock.php?sym=TDW#google_vignette

[gfp]

And a current example of a *very* coiled spring is FIH.U ->

 

[brobro777]

I don't use Technical Analysis but I think using 200 moving average to get a sense of general trend for indexes is good

 

[gfp]

Someone mentioned homebuilders were up today over on the JOE thread and I noticed that TOL - Toll Brothers - is breaking out of a similar pattern to Tidewater and Valaris 

 

[DooDiligence]

I'm not a chart reader. What is this saying?

 

[gfp]

11 minutes ago, DooDiligence said:

I'm not a chart reader. What is this saying?

 

 

This pattern is the classic "I'm scared and rotating out of tech and into 'value' because I can't do my own work and the internet says the PE is 12" in the first 2/3 of the chart.  Followed by the classic pattern of "a very large personality is finally retiring at my largest holding and I am turning over my portfolio to a professional money manager who is going to promptly liquidate my largest holding."

 

Textbook

[Hektor]

1 minute ago, gfp said:

 

This pattern is the classic "I'm scared and rotating out of tech and into 'value' because I can't do my own work and the internet says the PE is 12" in the first 2/3 of the chart.  Followed by the classic pattern of "a very large personality is finally retiring at my largest holding and I am turning over my portfolio to a professional money manager who is going to promptly liquidate my largest holding."

 

Textbook

[73 Reds]

16 minutes ago, DooDiligence said:

I'm not a chart reader. What is this saying?

 

The answer with a 100% degree of accuracy is:  We're in the 9th trading day of June.

[DooDiligence]

4 hours ago, gfp said:

 

This pattern is the classic "I'm scared and rotating out of tech and into 'value' because I can't do my own work and the internet says the PE is 12" in the first 2/3 of the chart.  Followed by the classic pattern of "a very large personality is finally retiring at my largest holding and I am turning over my portfolio to a professional money manager who is going to promptly liquidate my largest holding."

 

Textbook

 

 

If I turned mine over to a pro now they'd be liquidating Nintendo at exactly the wrong time.

I'ma let my stinker bids marinate. Hopefully they'll start hitting around $450.

[HubbadaPow]

The most important use of TA is to wait until the price stops freefalling before buying.  IDK about the rest.

[Sweet]

I look at all the charts of something I buy, I think it’s hugely under rated, but I don’t do technical analysis at all.

 

For example, if you think you’ve found a great company, and the chart looks great, chances the stock will be a winner.

 

If you find a company that looks interesting, say an undervalued play, and you look at the chart and it’s flat or down for many years, very often there is something wrong.

 

There are times when the chart is just wrong, Meta, Amazon, recently.  So it has its limitations for sure too.

Edited June 13, 2025 by Sweet

[LC]

 

8 minutes ago, Sweet said:

if you think you’ve found a great company, and the chart looks great, chances the stock will be a winner.

 

Serious question - Which charts look great, how do you tell?

I see different folks looking at the same chart and one person says it looks great, others say it looks terrible...what is the criteria? 

[DooDiligence]

46 minutes ago, LC said:

 

 

Serious question - Which charts look great, how do you tell?

I see different folks looking at the same chart and one person says it looks great, others say it looks terrible...what is the criteria? 

 

There's no understanding the mind of a wiggle watcher.

All I know is up and to the right is good.

 

edit: usually

Edited June 13, 2025 by DooDiligence

[Sweet]

1 hour ago, LC said:

 

 

Serious question - Which charts look great, how do you tell?

I see different folks looking at the same chart and one person says it looks great, others say it looks terrible...what is the criteria? 

If the chart keeps rising on a very long term view - 10 years.

 

Charts like MA, Autozone, NVR, Costco.  When charts look like that something about that business is working.  Each of them have a slightly different story about why they are killing it, the chart doesn’t tell you want, but it tells you there is something.

 

Terrible charts I don’t think they need any introduction.  Look at most biotechs or O&G shit cos.

 

Charts that make you pause and think, ‘well this company’s value looks attractive but maybe there is something I don’t understand because of that terrible chart’ - GM, F, INTC, OXY.

 

Charts where the stocks have been historically awesome but have had big drawdowns which are understandable - AMZN, GOOG, Meta (during covid), banks, insurances (during GFA) etc.

 

Looking at a chart is like a gut check.  If I find a great company and the chart is long term terrible / flat - it means I’m probably wrong about the company.  There are exceptions of course.

 

Edited June 13, 2025 by Sweet

[Spekulatius]

On 6/12/2025 at 10:05 AM, 73 Reds said:

The answer with a 100% degree of accuracy is:  We're in the 9th trading day of June.

It’s says, put in a limit order at $450 and change maybe it hits on a bad news day.

[DooDiligence]

13 minutes ago, Spekulatius said:

It’s says, put in a limit order at $450 and change maybe it hits on a bad news day.

 

I've laddered them down from there. So I guess a down and to the right would look good in this case.

[LC]

47 minutes ago, Sweet said:

If the chart keeps rising on a very long term view - 10 years.

 

Charts like MA, Autozone, NVR, Costco.  When charts look like that something about that business is working.  Each of them have a slightly different story about why they are killing it, the chart doesn’t tell you want, but it tells you there is something.

 

Terrible charts I don’t think they need any introduction.  Look at most biotechs or O&G shit cos.

 

Charts that make you pause and think, ‘well this company’s value looks attractive but maybe there is something I don’t understand because of that terrible chart’ - GM, F, INTC, OXY.

 

Charts where the stocks have been historically awesome but have had big drawdowns which are understandable - AMZN, GOOG, Meta (during covid), banks, insurances (during GFA) etc.

 

Looking at a chart is like a gut check.  If I find a great company and the chart is long term terrible / flat - it means I’m probably wrong about the company.  There are exceptions of course.

 

 

ok that makes more sense to me - you are looking at much longer time horizons than I was expecting.

 

Essentially confirming the phrase "in the long run, the market is a weighing machine" 

 

I was thinking looking at like a 30 day price chart with head and shoulders and trying to figure out whether it will rain money or dandruff. 

 

 

On the topic: I do sometimes pay attention when stocks are making new highs or new lows, what volume is that based on? Specifically whether the volume at those highs or lows are only a few shares or whether it's a standard trading volume. 

 

A 52 week low on a few shares could be a buying opportunity. 

Similarly a 52 week high on only a few shares could be a selling opportunity.

[Spekulatius]

Maybe I am the only one to admit it,  but the chart is the first thing that I look at when I learn about a new stock. It doesn’t take long to see what the sentiment is right now. Also a stock that has not performed for a long time  (5 years +) has issues and you need to find out what those issues are.

Edited June 13, 2025 by Spekulatius

[hardcorevalue]

You guys are too smart for posts this dumb. 

[Sweet]

16 hours ago, LC said:

 

ok that makes more sense to me - you are looking at much longer time horizons than I was expecting.

 

Essentially confirming the phrase "in the long run, the market is a weighing machine" 

 

I was thinking looking at like a 30 day price chart with head and shoulders and trying to figure out whether it will rain money or dandruff. 

 

 

On the topic: I do sometimes pay attention when stocks are making new highs or new lows, what volume is that based on? Specifically whether the volume at those highs or lows are only a few shares or whether it's a standard trading volume. 

 

A 52 week low on a few shares could be a buying opportunity. 

Similarly a 52 week high on only a few shares could be a selling opportunity.

Yes, the pattern stuff, there is a slight predictive edge in some patterns but it is very small - like 52% more likely in one direction.  It’s not useless but it’s practically useless in my view. 
 

I’m similar to Spek.  Whilst I don’t look at the chart first it’s certainly something I pay a lot of attention to for the reasons mentioned earlier.

 

I also still look at 52 week highs and lows but I’ve never really looked at volume - maybe I should.

 

I saw a post on Twitter recently which basically amounted to - that nearly all public companies are just terrible and not worth investing in.  And when you go through the list of really great companies there are about 100-200 globally.  The more I do this the more I really feel that’s true, and it’s just about buying them and decent pricing and AFKing.

[gfp]

Here is a fairly textbook bull flag in MSGE.  We'll see how it resolves

 

TOL and TDW from the earlier posts are behaving as you would expect from a "chart" standpoint.  (I don't own either of them, just noticed the patterns)

 

FIH.u continues to look pretty good on the chart, as it did when it was posted in this thread.

 

 

 

 

 

Edited July 2, 2025 by gfp

[73 Reds]

7 minutes ago, gfp said:

Here is a fairly textbook bull flag in MSGE.  We'll see how it resolves

 

TOL and TDW from the earlier posts are behaving as you would expect from a "chart" standpoint.  (I don't own either of them, just noticed the patterns)

 

FIH.u continues to look pretty good on the chart, as it did when it was posted in this thread.

 

 

 

 

 

I see squiggly lines and bottle rockets that passed.  Now, if you could post next week's squiggly lines and bottle rockets today, you'd be on to something!