Aloysius Chan's Blog

Opposite mentality Watch out for news claiming bearish to be bullish or vice versa If reported S&P 500 earnings rise in a year, the S&P 500 is likely to perform worse than average that year, and vice versa Computers are generating the news Collective efforts Earnings and the market move up and down together The greater the earnings increases, the higher the market’s return When earnings are up, it is time to buy stocks, and when earnings are down, it is time to sell When the market’s price/earnings (P/E) ratio is high, it is time to sell Company's financial health indicators Front-end income loading Borrowing Capitalizing costs Timing costs Timing sales Acquisitions Accounting I: Writing off R&D Acquisitions Accounting II: Fuzz Acquisitions Accounting III: Goodwill Restructuring charges Consolidating results Asset impairment charges Accounting for stock options Inventories and receivable The storehouse Timing an accounting method switch Changing auditors Never believe i...

Mercantile credit: the credit which businessmen extend when selling goods on time for resale or for commercial use 10 vital trends Corporate Trend toward financial strength or weakness Trend of management Trend of earning power and dividends Trend toward or away from leadership in the industry Industrial Trend of the industry represented by a group of stokcs Trend of business conditions in general Technical Trend of the long swing of the market Intermediate swing Short or daily swings Trend of manipulation

Continuous advice doesn't work Keltner buy line + Keltner sell line = Keltner bands Keltner buy line: 10-day-moving-average typical price + 10-day moving average (high-low) Keltner sell line: 10-day-moving-average typical price - 10-day moving average (high-low) Bomar band Upper band = 85% of data above the average for the past 250 periods Middle band = 21-day moving average Lower band = 85% of data beneath the average for the past 250 periods. Bollinger Bands were born in 1983 The key to Bollinger Bands is volatility BandWidth is most useful for identifying the Squeeze (Upper BB - lower BB)/middle BB Use the Squeeze as a setup Bollinger Bands can help clarify Ws Tops are more complex than bottoms; hence they are harder to diagnose 3 pushes to a high is a very common formation Low volatility begets high volatility and vice versa Avoid collinearity Volume indicator formulas One balance volume = volume + the sign of the change Volume-price trend = volume + percentage change Negative ...

The mirror test: "is xxx a good investment?" Do I own a house? Do I need the money? Do I have the personal qualities it takes to succeed? Do not ask if the market is good or bad - it is never all good or all bad, depending on your investment goals. When getting a buy signal, consider the following: Don’t overestimate the skill and wisdom of professionals Take advantage of what you already know Look for opportunities that haven’t yet been discovered and certified by Wall Street—companies that are “off the radar scope.” Invest in a house before you invest in a stock Invest in companies, not in the stock market Ignore short-term fluctuations Large profits can be made in common stocks Large losses can be made in common stocks Predicting the economy is futile Predicting the short-term direction of the stock market is futile The long-term returns from stocks are both relatively predictable and also far superior to the long-term returns from bonds Keeping up with a company in which ...

See no evil - whenever there is bullish or bearish trend, get ready to go opposite direction. Hear no evil - whenever there is a bullish or bearish news, stop trading. Speak no evil - don't tell anyone what you going to do in the market. Long black confirms resistance Spinning top warn the lose of market momentum Doji is "tired" in Japanese Long shadow candles also called high-waves. The market lost its sense of direction in a trend when a high-waves emerge Hammer, hammering out the base Hanging man, the top become fragile Shooting star Dark cloud cover Piercing pattern Engulfing pattern (where the next candle is in opposite trend and much larger than itself) Harami (pregnant woman) Evening star, 3 candle patterns. There is stillness in the middle Do not trust the technical tools too much, even monkeys fall from the tree. In a trend, it is easier to run downhill than up one. Disparity index: comparing the close to the moving average Divergence index: how much price is div...

Why forex? Foreign exchange is the largest market in the world and has growing liquidity.  There is 24-hour around-the-clock trading.  Traders can profit in both bull and bear markets.  There are no trading curbs.  Instant executable trading platform minimizes slippage and errors.  Even though higher leverage increases risk, many traders see trading the FX market as getting more bang for the buck. In 1979 George Soros bet against the UK involvement in the Exchange Rate Mechanism (ERM). In 1993, Maastricht Treaty was set for countries if they were to join the ERM. Market move in the long term goog_828089451Economic factor, social factor, political force, supply and demand The balance of payments account is divided into two parts: the current account and the capital account. The current account measures trade in tangible, visible items such as cars and manufactured goods; the surplus or deficit between exports and imports is called the trade balance. The capi...

Basic guideline All markets are interrelated; markets don't move in isolation. Intermarket work provides important background data. Intermarket work uses external, as opposed to internal, data. Technical analysis is the preferred vehicle. Heavy emphasis is placed on the futures markets Futures-oriented technical indicators are employed. Key market relationships Action within commodity groups, such as the relationship of gold to platinum or crude to heating oil. Action between related commodity groups, such as that between the precious metals and energy markets.  The relationship between the CRB Index and the various commodity groups and markets.  The inverse relationship between commodities and bonds.  The positive relationship between bonds and the stock market.  The inverse relationship between the U.S. dollar and the various commodity markets, in particular the gold market.  The relationship between various futures markets and related stock market groups, for...

 Retracement of 50%, 63%, 75% and 100% Gann: Level - Percentage - Degree - Angle - Support/Resistance 1/8 - 12.5 - 14 - 1x4 - Support 2/8 - 25 - 26.5 - 1x2 - Support 4/8 - 50 - 45 - 1x1 - Neutral 5/8 - 62.5 - 63.5 - 2x1 - Resistance 6/8 - 75 - 75 - 4x1 - Resistance 7/8 - 87.5 - 82.5 - 8x1 - Resistance 8/8 - 100 - 90 - NA - Resistance Gann and Geometric Angles: Angle - Gann (Price vs. Time) - Geometric (degrees) A - 1x2 - 26.5 B - 1x1 - 45 C - 2x1 - 63.5 D - 4x1 - 75 Gann's 50% retracement rule After an initial, sustained price move, either up or down, prices retrace to 50% (4/8) of their initial move. If the retracement exceeds 50%, prices should continue to the 62.5% (5/8) level, before a reaction occurs. 63º line In a rising market, never lower your stop from its current level. In a falling market, never raise your stop from its current level. Gann rules Prices will significantly react at the 50% retracement level. If prices exceed the 50% retracement level, the next level at whi...