Rocket Stocks for Swing and Positional

#1
Started this thread for sharing ideas related buy stocks for swing and positional. I will be posting my observation of the historical behavior of some the top stocks and search those characteristics in other stocks.I will be using Technical Analysis and a little bit of basic Fundamental analysis.
 

gautam7821

Well-Known Member
#2
Good initiative, a new money tree planted , keep it up. :)
 
#5
Started this thread for sharing ideas related buy stocks for swing and positional. I will be posting my observation of the historical behavior of some the top stocks and search those characteristics in other stocks.I will be using Technical Analysis and a little bit of basic Fundamental analysis.
- We await your call for trade on Monday 12th nov.
 
#6
The story behind this approach

BE ABSOLUTELY CLEAR ON THIS POINT: As an individual we simply cannot compete in the
trading "game" on the basis of natural talent or information and knowledge of
the asset being traded. Nor can you compete in computing power and technical expertise. In fact,
it is an enormously delusional to think otherwise. To do so is as great a conceit as thinking
you or I could successfully compete against the world's best golfers, tennis players, football players,
cricket players, and so on. Therefore, every time you decide to make a trade based on information or knowledge of the asset being traded, be aware that what you are doing is no different than stepping into the ring with the heavyweight champion of the world. So, be intelligent; do not approach
trading by relying on natural talent, technological expertise, or information and knowledge of the asset.

There is only one level playing field.

In a simple price up or down numbers game, all players, regardless of who they might be individuals,
professionals, corporations, governments, FII,DII operate on the exact same level. What this means is
that a number moving up and down is no different to you and me than it is to a corporation
loaded with information, knowledge, and experts. No matter who is looking at it, a number is
just a number. Consequently, approaching trading as a basic up/down numbers game instantly
changes the game's emphasis from one of knowing information, knowledge, and technology to
one of observing price movement, and then acting on those observations.
Hope So far I was able to make it clear that we cannot compete on information since we don't have the reach to get the latest information.
We also cannot compete on the computing power even with our own algos and since our computing power would be far less and the depth of the capital finite.Observing the price is the only ultimate weapon we retail traders have.
 
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#7
Now how do I get to know where and what stock is moving or rather the big money is moving.
Fortunately the big money wear big shoes and cannot hide their footprint.I began studying for signs of how to get these kind of stocks
which move at a phenomenal rate and how to catch them. Fortunately I stumbled upon Eric Muathe's video on youtube. I borrowed some ideas from there.Now I had a technical indicator which can detect those stocks which are in the move.However I wanted to ensure that we don't get trapped in operator driven stocks.For that I check the health of the company using some basic fundamental data.I am not an expert on Fundamental analysis.But there are simple things one can look for in a decent company.
 
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#8
Now coming to the tools as to how to detect these stocks. One of the tools i use is the plain old RSI.The misconception or the academic version says that whenever the stock goes above RSI 70 it is in overbought region.There is nothing overbought or oversold. Infact if the stock is above 70 RSi it is a sign of strength.

For detection :
Chart Time Frame : Monthly ( Yes you heard it right monthly).
Indicator : RSI - Default 14 period. You can tinker with parameter to suit your requirements.
Indicator : MACD (5,8,3) . You can go with the default settings. This Indicator is optional.

There are multiple Setups where these stocks can be taken.
1. The stocks goes above RSI 70 on the monthly charts for the first time in its lifetime.These are very good trades but chances of failure are high but the returns are multi-fold if it sustains there.
2.The stock goes above RSI 70 after a Gap of 3 years or more. These too are very nice to trade.
3.The stock is already in the RSI > 70 Zone and makes a fresh high in the RSI.For these kind of stocks you might have to wait for a dip in the daily time frame to take a position.But when the market goes up these are the ones firing on all cylinders.

All of the above conditions if supported by Positive crossover of MACD above the Zero line is good.If the MACD also makes a fresh new high then that is the stock you don't let go.

As with all strategies this one too has chances of failure. You might at times end up buying at the top.

How to trade these stocks.

If you are the kind with enough patience and want to play the long game. You can use the monthly charts
Else you can use the same stocks on the daily chart and i have seen these stocks moving 10-20% within a 1-2 month period with ease.
As I have said after I shortlist these stocks I go through the fundamental data to check if these are indeed very strong stocks.

It pains me to see people buying stocks just because they heard on TV or based on a feeling that this will go up. I ask them that when you want to buy a small item you do so much research on the multiple eCommerce sites and the finalize it.Then why don't you do that due diligence when you are putting your hard earned money and buying a part of the business.

Last but not the least. This is not the only system i use for my Swing and Positional. I use the Tom Demark system also which is an excellent reversal trading methodology. And if that systems falls within this system parameter then I go blindly buy them.

Now I will be posting some charts in the following posts.If possible will be posting my real trades all of the which worked out.
Please do not post anything after this post so that the flow will not be lost.Later we can go ahead and have discussions. I hope you understand.
 
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#9
Let me start with the first example with Page Industries. Many of you have sweet and painful memories with this one.
On the Monthly chart this one entered RSI > 70 on the monthly chart in June 2009 at the closing price of 491.The RSI came below 70 in Aug 2015.
By that time its closing price was 13,027.You can calculate the returns which does not include the dividends/bonus. Note that the MACD crossover happened even before the RSI came down.

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