Charting software & data

If you do not have any, download trials or purchase charting software.

Use free End of Day data, or purchase real time data.

Cannot do the above? Try online charts: USA, UK, Canada, India & Australia.

Search technical analysis if you need to increase your knowledge.

 

Screeners

Screen before you chart. Screeners: USA, UK, Canada, India & Australia

Screen (eg growth, prices above moving averages) to find stocks to chart.

Look at online TA results and chart them for your technical analysis.

Look at the TA screens from StockCharts (USA & Canada).

Try commercial screeners or screeners bundled with your TA software.

 

Charts & Technical indicators

There are many indicators, but always check volume & momentum.

Master the use of moving averages, slow stochastic, MACD histogram & RSI .

Have confirmation from several indicators before you trade. Have a system.

 

Chart Patterns

Look first for double tops, double bottoms and gaps.

Remember patterns should be obvious.

Make sure you have at least three touching points if you use trend lines.

 

Trading

Be in a sound state of mind; good trading psychology is paramount.

Use stop losses, especially with speculative or small cap stocks.

Rookies should test their systems with paper trades before real ones.

Have price reference points in your trades. Fibonacci numbers may be useful.

Track your stocks daily and watch the S&P 500 for signs of volatility.

Watch for sharp rises in the yen; the size of the yen carry trade is unknown.

Losses are lessons, gains from a tested system are your goal.

 

Value Investors

 

Overview

What makes a stock undervalued? Look at this reference to value investing.

The following is an elimination method:

 

Custom Screeners

Decide what sectors are undervalued, find average P/E ratios for the sector.

Screen for low P/E ratios. Screeners: USA, UK, Canada, India & Australia.

Screen for below average P/B values (at least under 2).

Screen for low PEG ratios (under 1).

Discard results that have a market cap under $400 million (USD).

Look for ROE values above the sector average & low PSR & debt equity ratios.

Look for strong and steadily increasing yearly profit margins.

 

Predefined Screeners

Apply value investing analysis to predefined screening results.

For USA exchanges try exploring value screeners for results to scrutinise.

For LSX try Digital Look (log in required) & their intrinsic value screen.

For TSX try: MSN Money: Shareslink configured value screener

For ASX try: MSN Money: Top value, low PE bottom trawlers

For India try: ICICI Direct: medium/high cap with low P/E & high div yield

 

Competitive advantage

What is it? Buffett's classic 'moat stocks' include:

Cocal Cola (global brand), GEICO (pricing), Washington Post (market share)

Note: newspapers have generally lost market share since the rise of the net.

The advantage should hinder competition and be difficult to replicate.

 

Further criteria

Management should reinvest earnings; scrutinise dividends. Look at ROI.

Ethical management; the level of executive pay is a good barometer.

 

Conclusion

Undervalued stocks need to be uncovered through careful scrutiny.

Foreign markets offer opportunities: Warren Buffet's Korean foray (under Q3)

A value investing strategy does not have to mean a diversified portfolio.

Undervalued stocks often have a 'stand out' product or service.

Commodity stocks should often be avoided because of competition factors.

Consistent long term growth is a major aim.