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Created on: 1/18/2011 3:07:41 AM Last Update: 2/20/2011 9:47:21 PM Posted by: RTT
WARNING: This entry is 5498 days old. It may contain broken links, out-dated or misleading content. Please read on with caution.
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BP and Toyota Motors bad stocks of 2010, maybe not !
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In 2010, we all remember BP and their horrific oil spill in the Gulf of Mexico. We also remember Toyota Motors issue with their brake faults. Both stocks suffered mini crashes, however both companies can be regarded as high quality with plenty of cash, both took it on the chin and said they would fix it, in which they did and are.
So what would a savvy investor do, look for opportunity of course.
And what would William Gann have done, I wonder.
We at readtheticker.com are great fans on Gann angles methods. Many dont know how to apply them nor know how to trade around them. One of the great aspects of angles is that they only require one point on the chart where as a trendline requires two, believe it or not that's an advantage.
Gann angles are like a stock trend speed test, how fast is price moving (vertical axis) relative to time (horizontal axis). For example, a 45 degree angle is 1 unit in time to 1 unit in price or 1x1. A 63.75 degree angle is 1 unit of time for 2 units of price or 1x2. So as an investor I would very much like my investment to grow at least 2 units of price to each unit in time. If you want more details on how to trade and draw can angles on computer charts I suggest you visit readtheticker.com to learn more.
Note: Readtheticker.com Gann charts are true (1x1) time squaring of price charts. The angles are not apportioned or adjusted to fit, they a drawn true to the degrees stated.
Let's review BP.
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On the oil spill news crashed price from $60 to $27. Price bounced back through the Gann angle 15 degrees (4x1) and sold of back gently to strong support at $35. This mild sell off to $35 at (A) is called a 'price test', that is a mild sell off to determine if sellers are still in the market, if they are price would fall further, if not price would reverse higher as the bulls realized that sellers will not frustrate higher prices as the selling is mostly likely exhausted. This bullish price action off the 4x1 line (15 degrees) is the buy signal Gann would consider. The resulting investment so far has rendered (49.25 - 35.00) $14.25 or 42% return. Not bad when all the news was so very very bad. The Gann investor profited very well.
Let's review Toyota Motors (TM).
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On the news of the recall of Toyota cars with break issues the stock price mini crash fell from $92 to $72. Just what the struggling American car industry needed to boost their local product via Ford and General Motors. Congress made a meal of Toyota, again and again. Once again Gann wouldnt touch price while it crashes, however once price settled on the first 2x1 (26.25 degrees) completed a test (as discussed above) or more commonly know as a double bottom off the 2x1 angle, he would consider buying at (A). Other possible entry buy decisions can be found at (B) and (C). Subject to your stop rules buying around $70 would currently return (86-70) $16 or 22% return. Not bad at all.
Disclosure: Currently readtheticker.com holds no positions in either security
NOTE: Posts here are the lite version, more depth on each subject can be found via our RTT Plus membership.
Changes in the world is the source of all market moves, to catch and ride the change we believe a combination
of Gann Angles,
Cycles,
Wyckoff and
Ney logic
is the best way to ride the change, after all these methods have been used successfully for 70+ years.
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Investing Quote...
..."They say you never grow poor taking profits. No, you don’t. But neither do you grow rich taking a four-point profit in a bull market."..
Jesse Livermore
.."Stock market bubbles don't grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception"..
George Soros
Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.
Nobel Laureate for Economics Paul Samuelson
After a question on how to become a better investor professional Mr Munger responded, ..“Read history, read history, read history."..
Charlie Munger
..“It’s not what you own that will send you bust but what you owe.”..
Anon
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We at readtheticker.com hold the view that a mix of stock chart technical analysis, Richard Wyckoff, William Gann and Jim Hurst methods plus market fundamentals allows the investor to formulate a very sound market opinion. These attributes are mutually inclusive and must be weighted equally before investing or trading in any Stock, ETF, Currency, Bond, Commodity, CFD or Mutual Fund
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