Geldpress

There are two types of traders – fundamentalists and market technicians. The fundamentalists don’t concentrate on dissecting the numbers – earnings, cash flow, balance sheet, future profit projections – to come up with what they perceive to be the value of a company. When the stock trades lower then their perceived value, they buy shares.

A market technician concentrates on price and volume pattern, and historical prices to determine when to buy and sell. This is not to say they don’t care about the fundamentals. They just take a leap of faith that the fundamentals have already been baked in by everyone else to come up with the range of market prices. And they also take extra caution during times when the fundamentals can change everything else – earnings season.

So what is technical analysis? It’s a study of the statistics generated by market activity – mainly past price and volume action. And it’s the extrapolation of those studies to make a determination of where the market is going next. There are thousands of indicators and study sets that a market technician uses, but they key is not to use all of them at the same time! In fact, the best approach I’ve found is to really narrow the field to just a few basic studies.

The examples below will use Boeing (BA) as an example only. And to ensure the most timely data, I will link to the Yahoo Finance pages so you can see the charts yourself.

Support and Resistance – Stocks will often stay within channels and bounce between support and resistance lines. When the price of a stock goes to low, the value investors are jumping in with their buy orders. The price point at which heavy buy activity starts is the support line. It is the low points in a chart at which the stock price stops going lower, and reverses direction to proceed higher. The resistance level is the exact opposite and it is the point at which people get nervous and stop buying because the perceived price is to high. Support and resistance levels are easier to see on range charts (bar or candle) versus line charts.

Moving Average – a moving average is a method to smooth out a jagged price chart, where each point on the moving average line is an average price over a given period. A 20 day moving average would utilize 20 days of information (today’s price plus the previous 19) for every point on the graph. Take a look at the Boeing moving average to see for yourself. The moving average is one of the simplest technical indicators. As prices broach the moving average line, many people believe it will continue in the same direction for a long enough time to yield a profit.

…Stay tuned for more technical analysis info… Coming soon at Geldpress.

How do you invest your money? Do you throw it at mutual funds and let someone else manage it? Do you throw it an index and just play the averages? Or do you try to out maneuver the market, and beat the averages by picking your own stocks? If you are in the latter category, the good news is that there are now free and simple tools available to everyone to help you filter out the losers, and narrow in on the winners. Yahoo, MSN and Google offer three of the most popular, well featured, and free stock screeners around. This article will help you get started.

1) The Yahoo Finance stock screener is a basic screener that allows you to search on 13 criteria, and also allows for limiting results based on either industry group or index membership.

2) MSN Money goes a step further and offers pre-defined Power Searches, as well as the manual stock screener where you enter each specific search criteria. If you believe in the power of momentum, then perhaps the MSN stocks at new 52 week high power search is for you. The power search automatically orders the results with the highest prices at the top. The disadvantage with the power search is that the resultant data is limited to only price and market capitalization info. If I could limit the power search results to only US based companies with high liquidity (> 500,000 shares/day), and stocks priced above 20, then the MSN power searches would be a regular stop for me.

3) The google stock screener has a very simple look and feel, but certainly not lacking in sophistication. I especially like the distribution graphic for the various parameters.

I also like google’s choice for the default search criteria using 4 simple parameters – market cap, p/e ratio, dividend yield and 52 week price change percentage. For my own screen, I used the following parameters:

• Market Cap: 2B to 100B (not to small and not to large)
• P/E Ratio: 10 to 40
• Dividend Yield (%): 1 to 3 (why invest at all if they are not sharing the profits!)
• 52 week price change (%): -5 to 50 (stay away from major losers, and bubbles in the making)

The above 4 criteria resulted in 111 companies. If I add a criteria for average volume over 500,000 shares, and stock price greater then 20, the results are then limited to 82 companies. To see the most recent results of the above search, use this google search link.

4) The Marketwatch stock screener also has a very simple look and feel, but goes a step further by allowing a user to enter both screening data and output data. The screening data entry is very easy to use and allows criteria based on price, volume, fundamentals, and technicals. It also allows results to specific exchanges or industries. Once all the search criteria are selected, you can then choose how to display the results, selecting which fields are displayed as well as which field to key the sort from.

Food and fuel prices got you down? Stock market driving you broke? Don’t despair, just hedge your bets with some commodity exposure. It is now easier then ever to play the commodities market – without learning the complexities of the futures market.

Invesco Powershares offers several simple exchange traded funds to gain exposure to the commodities market, and to hedge the rest of your portfolios. One that is doing very well is the Deutsche Bank commodity index, with a 5 year annual average return of over 31%. DBC has exposure to the following:

• Aluminum – 12.5% base weight
• Corn – 11.24% base weight
• Gold – 10% base weight
• Heating oil – 20% base weight
• Light crude – 35% base weight
• Wheat – 11.25% base weight

Be sure to check out the powershares site for more information.