Greetings, fellow Pro-fundity team members -
1-12-01 Page

E. This Week's Guidepost

A ”subscriber’s view” of the Pro-fundity Page, continued:

We’ve had some interesting feedback on last week’s Guidepost, our view of the page from the subscriber’s focal angle. The week we chose to analyze, 12/22/00, had a very good report after 14 days with 9 gainers and only one loser, returning +16% in 14 days. In fact, the single loser had rolled up to a 17% gain before rolling down to its close on January 5th. That all sounds pretty remarkable, but even more so if we look at the performance of this same 10-ticker group 7 days later, on Friday the 12th of January:

We’ve been asked why past 10-Ticker picks aren’t analyzed in this manner more often. We’d take that question first, then make an important point about the selection of stocks to lay our money down.

1. The report below is for our Pick selection last July 21st. This looks like another great report with nine winners and one loser. But those figures are the aggregate return on all 10 had we bought and then held them until the close this Friday. Our selections do include excellent fundamentals, making them good long-term buy and hold picks. But that is not the tenor of the Pro-fundity page. We hope to get more on our dollar by intelligently buying low and selling high (seems I’ve heard that before). We attempt to trade based on price patterns from a technical vantage point. The fact that our selections have good fundamentals and are usually excellent long-term picks is a perk. We are traders!

   

2. For instance, look at the price pattern on the chart below of the first selection on our pick list, ABN. Sure, we had an increase from the pick date to last Friday’s close, but look at the price action in between. Don’t you think we could have made more than the 5% over the 175 days?

   

3. From a closer time-frame, last weeks picks performed as shown after seven days:

   

4. The biggest loser in the group, El Paso Electric, is falling to the bottom of what we believe will be a nice roll. The fact that is has fallen 8% in a week does not deter us.

   

5. So, point made. The study of pick performance as a weekly bucket is not informative and does not measure the success of our trading strategies. Each ticker must stand on its own, measured by how well it satisfies our short-term goals, ever ready to benefit from the great fundamental’s examples that shoot out of the trading channel. There are thousands of choices as we look for price patterns suggesting rollers. Why not enjoy solid long-term performers at the same time? You will find no other service on the web with this approach!

Now a strategy short-take. As we line up the thousands of possible picks each week, one technique helps the resulting quality big-time. Although we study dozens of indicators to help forecast price action, there is one indicator that stands out above the rest, Price itself!

1. How many times have you studied the indicators; Stochastics, Wilder’s RSI, MACD, OBV, etc., etc., and found that the price just did not cooperate? Hey, the price was supposed to go up, didn’t it get the message? I lost count on that experience long ago. But I’ve learned this lesson well: no indicator ever made the price to anything. Its the other way around, indicators are responding to what the price has already done! Think about it. Where do the indicators get their messages? From price and volume. How can we then use price? Here’s a tip we use. Look at the chart on the first ticker from our 12/22/00 list. This pattern looked good to us, with an increasing trend from July and an appropriate pull-back in mid-December.

   

2. But we never make a selection without one additional step. What is the longer range price pattern? Since we use TC-2000 for our technical software, all we do is press the number 5 on the keyboard. Why? That changes the price pattern from a “daily” format to a “weekly” format, stretching the pattern to cover five times the calendar space. You can look at the "weekly chart" option on any software. Look at what that does to the picture of ABFS:

   

3. This long-time picture shows us the ticker has been in an up-trend for over a year, suggesting strength from the vantage point of price. We would much rather work with a stock that has shown increasing performance than the example that follows:

   

4. This ticker almost made the pick list back on December 22nd, but when we hit the “5” to look at the weekly snapshot, here is what we saw:

   

5. We didn’t like where the price had been. Is that to say a price pattern can’t turn around? Sure it can. DAB may turn out to be a winner. But in our experience a stock like ABFS is a better risk than a stock like DAB. That is what Pro-fundity is all about, reducing risk. That is why we place importance on price as a technical indicator.

6. The picks we publish each week are not recommendations, they are seed for your own flower garden. But they must be planted, nourished and cared for to achieve the greatest yield. If you are content to just plant and return for the harvest in the fall, you may find an adequate yield as well. This is your ballgame, we hope you learn to play it well. Our site will help you do that. Stay tuned.
   Understanding:

   It is our intent to help our subscribers understand market strategies well enough to make informed decisions and understand the risks.

   TC-2000 tutorials are available on the home page.

   Be diligent...
   Take action!

   

   
   
   
   
   

   
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