The arrows that Phil Town uses are at Investools and they make for easy
analysis, but virtually every research site and online broker now has
these key tools.
In Rule #1 I show you how to set them up on MSN Money, and the principle holds for Yahoo, TD Ameritrade, Scottrade etc. You may not have arrows on the chart, but it's not rocket science to read the actual indicator and make a decision.
Read them like this:
After you get two of the three tools indicating "buy", your purchase is triggered by the third indicator on the day it says "buy" -- or the day after.
If you prefer, you can wait for a confirmation from volume as that third tool says "buy": volume is up by 150% of normal or more on the day the third tool says to buy.
On the 2nd of April the MACD and STOCHASTIC both crossed the "sell line" and got red arrows.
If we're trading BLUD, now we are waiting for the third signal.
On this one I'm using a 30-Day Moving Average. If you are more aggressive (or nervous), you can use a 10-Day MA.
You can see the price sliding day by day from the end of March. That also is going to tell us something; that there is a price break coming either upward or downward. The two early tools give us an advance warning about which direction it's going to go.
But we don't guess, we don't get emotional, we just wait patiently for the third signal. It comes with a huge volume spike on April 7th. The price opens at $26 and then drops to $23 on big volume. You can see the volume bar cranks up to 7 million shares or so. This is way past the average of 2 million or so. A jump to 3 million shares would be considered sufficient to confirm the move.
This chart shows a classic "GET OUT" set of signals that do, in fact, get us out well before the main event -- the announcement that Immucor is in trouble with the Feds.
That announcement came after trading on April 23, but hardly anything stays totally secret and it's pretty clear that some big guys had a hint and were selling steadily for about a month before the public got the info.
But they can't hide their trading. The tools told us to exit and we do so. No emotion. Just pull the plug and wait or move to another stock.
I'll write about stockpiling this one based on FACs in a day or two. Stay tuned.
Now go play.
