HOW TO ANALYZE CHARTS

The analysis of charts can be divided into eight steps. These are as follows:

1. Overall Trend

Determine what the overall trend is. You can achieve this by using trend lines, moving averages, or peak/trough analysis.

2. Support Levels

Look for areas of congestion or previous lows that are below the current price.

These mark the support levels. If the price falls below the support level, the trend is considered bearish.

3. Resistance Levels

Look for areas of congestion and previous highs that are above the current price. These mark the resistance levels. If the price rises above the resistance level, the trend is considered bullish.

4. Momentum

5. To measure momentum, it is customary to use an oscillator such as MACD. If the MACD is found to be above its 9-day Exponential Moving Average (EMA), the momentum is most likely bullish, or at the least moving in that direction.

6. Buying and Selling Pressure

You can use an indicator such as the Chaikin Money Flow to measure the buying and selling pressure of stocks and indices that have volume data available.

7. Price Relative

The Price Relative can be defined as an indicator that is used to compare the performance of stocks relative to each other or to a market index.

For stocks, it is calculated by dividing the price of a stock by the S&P 500 Index.

The plot of this line on a chart will indicate over a period of time whether the stock is underperforming or overperforming the market index.

8. Final Step

The final step entails consolidating your analysis of the previous 8 steps. It includes determining:

a. how strong the current trend is

b. what the stage or maturity level of the current trend is

c. What the reward versus risk calculation is of new positions

d. What the potential entry level of a new long position should be.

Table of Contents

1. Introduction
2. Fundamental Analysis
3. Qualitative Analysis
4. Value Investing
5. Growth Investing
6. GARP Investing
7. Income Investing
8. CANSLIM
9. Dogs of the Dow
10. Technical Analysis 1
11. Technical Analysis 2
12. Technical Analysis 3
13. Technical Analysis 4
14. Jim Cramer’s Strategies
15. Warren Buffet’s Strategies
16. Intrinsic Value