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1. Trend & Momentum “The Trend is Your Friend”

1. Trend & Momentum “The Trend is Your Friend”. A. Philosophy of Supply and Demand. Viewing the Company versus the Stock. A. Philosophy of Supply and Demand. Support and Resistance. A. Philosophy of Supply and Demand. S&P 500 Stock Index - Weekly H,L,C. S&P 500 - Weekly.

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1. Trend & Momentum “The Trend is Your Friend”

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  1. 1. Trend & Momentum “The Trend is Your Friend”

  2. A. Philosophy of Supply and Demand Viewing the Company versus the Stock

  3. A. Philosophy of Supply and Demand Support and Resistance

  4. A. Philosophy of Supply and Demand S&P 500 Stock Index - Weekly H,L,C S&P 500 - Weekly Cyclical bull market Cyclical bear market StockCharts.com

  5. A. Philosophy of Supply and Demand NASDAQ 100 Index - Weekly H,L,C NASDAQ - Weekly Secondary trend StockCharts.com

  6. A. Philosophy of Supply and Demand Dow Theory and the Ideal Marketplace Top Uptrend Downtrend Bottom

  7. A. Philosophy of Supply and Demand Dow Theory of “Confirmation” DJIA and DJTA - Weekly - May 2002-May 2005 DJ Industrials - Weekly Confirmation of New High in Transports DJ Transports - Weekly New High StockCharts.com

  8. A. Philosophy of Supply and Demand The Trend Uptrend Downtrend Lower Peaks Higher Peaks Higher Troughs Lower Troughs Sideways Trend Horizontal Peaks Horizontal Troughs

  9. B. Chart Construction Line Chart of Daily Close for Walt Disney Co.2003 - 2007 Disney - Daily StockCharts.com

  10. B. Chart Construction Weekly Bar Chart for Krispy Kreme DoughnutsDecember 1, 2002 - August 22, 2007 Krispy Kreme - Weekly StockCharts.com

  11. B. Chart Construction Monthly Bar Chart for Cisco Systems, Inc.1995-2005 (logarithmic scale) Cisco - CSCO StockCharts.com

  12. B. Chart Construction Definition of Candle Terms Drawing the Candle Lines

  13. B. Chart Construction Alleghany Technologies, Inc.One point ($1) box and 3 box reversal

  14. B. Chart Construction S&P 500 SPDRs (SPY)1 pt/box; 1 box reversal chart - daily StockCharts.com

  15. C. Trend Analysis Support and Resistance Zones February 7, 2005 - April 22, 2005 Walt Disney - Daily A C E F B D StockCharts.com

  16. C. Trend Analysis High-Volume Reversal July 2, 2003 - August 27, 2003 Walt Disney - Daily Resistance Stops Rally One-Day Reversal High Volume StockCharts.com

  17. C. Trend Analysis Regression Line and One Standard Deviation February 26, 2003 - September 11, 2003 Walt Disney - Daily Regression Line from Low to High +/- One Standard Deviation Channel StockCharts.com

  18. C. Trend Analysis Trend Line February 26, 2003 - September 11, 2003 Walt Disney - Daily Uptrend Line StockCharts.com

  19. C. Trend Analysis Trend Line with Channel Line February 26, 2003 - September 11, 2003 Walt Disney - Daily B A Uptrend Line with Channel Line StockCharts.com

  20. C. Trend Analysis Simple Moving Average February 26, 2003 - September 15, 2003 Walt Disney - Daily Regression Line One Std. Dev. about Regression Line 60-Day MA StockCharts.com

  21. C. Trend Analysis 2 Moving Averages - Crossover @ Support & Resistance Zone February 26, 2003 - September 19, 2003 Walt Disney - Daily Cross-Over Where moving averages cross is often a Support and Resistance area 20-Day MA 60-Day MA Crossover is a Signal in a Trending Market StockCharts.com

  22. D. Chart Patterns Double Top with Breakout Down Entry Pullback Breakout

  23. D. Chart Patterns Triple Bottom with Breakout Up Breakout Entry Throwback

  24. D. Chart Patterns Descending Triangle with Breakout Up Throwback Breakout Entry

  25. D. Chart Patterns Diamond Pattern with Breakout Down Pullback Entry Breakout

  26. D. Chart Patterns Cup or Bowl and Handle Variety of a Rounding Bottom with Breakout Up Breakout Entry Throwback Handle

  27. D. Chart Patterns Head and Shoulders Top with Breakout Down Head Right Shoulder Left Shoulder Breakout Entry Pullback

  28. D. Chart Patterns Harami Candlestick Pattern Spinning Top Can Be Black or White

  29. D. Chart Patterns Evening Star and Morning Star Candlestick Patterns Evening Star (top) Morning Star (bottom) Spinning Top Can Be Black or White

  30. E. Mechanical Momentum Indicators On-Balance Volume July 22 - October 15, 2005 Apple Computer - Daily  On-Balance Volume (OBV) StockCharts.com

  31. E. Mechanical Momentum Indicators Chaiken Money Flow July 22 - October 15, 2005 Apple Computer - Daily Chaikin Money Flow StockCharts.com

  32. E. Mechanical Momentum Indicators Moving Average Convergence-Divergence (MACD) July 18 - October 17, 2005 Apple Computer - Daily   MACD Signal Line Overbought Line MACD   StockCharts.com

  33. E. Mechanical Momentum Indicators Rate of Change (ROC) July 18 - October 17, 2005 Apple Computer - Daily    14-Day Rate of Change (ROC)    StockCharts.com

  34. E. Mechanical Momentum Indicators Relative Strength Index (RSI) July 19 - October 15, 2005 Apple Computer - Daily 14-Day Relative Strength Index (RSI) Swing Failure Breakout Triangle StockCharts.com

  35. E. Mechanical Momentum Indicators Stochastic July 19 - October 15, 2005 Apple Computer - Daily    Overbought Down-ward Crossover Swing Failure and Breakdown Swing Failure and Breakup 14-3-3 Slow Stochastic Oversold Upward Crossover StockCharts.com

  36. E. Mechanical Momentum Indicators - continued Positive Volume Confirmation Royal Gold - Daily Royal Gold - Daily Expanding volume confirms rising prices Breakout confirmed by expanding volume Volume StockCharts.com

  37. E. Mechanical Momentum Indicators - continued Negative Volume Divergence Pepsico - Daily Pepsico - Daily Uptrend Broken StockCharts.com

  38. E. Mechanical Momentum Indicators - continued On-Balance Volume Confirmation S&P 500 - Daily S&P 500 - Daily Positive Divergence On-Balance Volume StockCharts.com

  39. E. Mechanical Momentum Indicators - continued Open InterestCopper Futures December 2005 Contract Price Open Interest Volume

  40. F. Relative Strength Price Trend versus Relative Strength RELATIVE STRENGTH 1 1 1 1 2 3 PRICE TREND 2 2 2 1 2 3 3 3 3 1 2 3 1 = Up 2 = Neutral 3 = Down

  41. F. Relative Strength International Flavors & Fragrances International Flavors & Fragrances Relative Strength - International Flavors & Fragrances : S&P500 StockCharts.com

  42. F. Relative Strength International Paper International Paper Relative Strength - International Paper : S&P500 StockCharts.com

  43. F. Relative Strength Dow Jones US Food & Beverage Index Dow Jones US Food & Beverage Index Dow Jones US Food & Beverage Index - MACD Relative Strength - DJ Food & Beverage Index : S&P500 StockCharts.com

  44. F. Relative Strength Dow Jones Industrial Average Dow Jones Industrial Average Capital Goods : Consumer Goods Capital Goods Outperformance Consumer Goods Outperformance StockCharts.com

  45. Asset Allocation How much in stocks Security Selection What to buy When to buy When to sell Technical analysis is critical to answering “when?” G. Money Management Portfolio Management

  46. G. Money Management Investment Policy - Why It Matters “Almost all of the really big trouble that you’re going to experience in the next year is in your portfolio right now; if you could reduce some of these really big problems, you might come out the winner in the Loser’s Game.”- Charles D. Ellis

  47. C = Current EPS growth – should be a minimum of 20% A = Annual EPS growth – should be at least 15-20% for 3 years N = New. The greatest winners had a major new product, new management, or new industry conditions A new high in price can alert you to new fundamental developments G. Money Management C-A-N-S-L-I-M

  48. S = Shares outstanding – past winners have had an average of less than 25 million L = Leadership – demonstrated by high relative strength for the stock and the stock’s industry group I = Institutional sponsorship – good stocks are owned by institutions M = Market – even good stocks go down in a bear market G. Money Management C-A-N-S-L-I-M

  49. 2. Sentiment (Behavioral Finance Analysis) “The Little Guy is Not Always Wrong”

  50. A. Transactional Indicators ISE 10-Day Put/Call Ratio S&P 500 Index Ratio 10-Day Ratio

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