Sample Newsletter

The three charts you are looking at on this page are all of the same company, Qualcom. I could go into specific details about this company and their business operations and why they are a good company. I could also go into a discussion about why another company in the same sector might be a better investment. In short fundamental analysis only gives you a part of the picture behind a stock chart.

In truth fundamental analysis or the analysis of a business and the industry they are in is important if you plan on being a long term investor in a company or industry. In the short run of days, weeks, or even months that plays a relatively minor factor in whether the stock is being bought or sold in a quantifiable fashion.

Positions in companies are constantly being bought and sold by different institutions and individuals depending on what their expectations of the stock or industry are.

A mutual fund might be purchasing a stock because they see it as undervalued over the next 12 -18 months and they want to take a position in it. An individual investor or a speculator may not wish to hold on to a security that long so their window of opportunity may seem different to them.

So timing is important to both the institution and the individual but seen from different perspectives makes the play a little more colorful.

The daily chart will always have a few more lines drawn on it for the same period of time than we do for the weekly or monthly chart. On the daily chart there is ample opportunity for profit. A stock like QCOM can be volatile at times. You can see on several occasions after a TL breakout that we experienced some intense volatility. Had you set a stop your position would have been taken out fairly soon after your entry. Setting stops is appropriate and prudent but a daily chart can expose you to greater volatility which can lead to more entries and exits as you try to assemble a postion that is trending more strongly with less volatility.

On the weekly chart you can see a few nice entries and exits over the several year period expressed here. Most of the positions were good for several weeks to several months and as you can see the volatility was less once the TL was broken and a direction was established either to the upside or the downside. A nice way to profit with less worry. Options would be very appropriate under these circumstances and of course they help leverage your gains with modest risk. We only refer to the purchase of calls or puts here for reasons of simplicity.

In looking at the monthly chart it is easy to see how a long term approach to this stock would have made an investor potentially wealthy over time. The monthly chart takes out much of the noise but does not always indicate early entry and exit strategies from a position as a weekly or daily chart might. That is why they are a more valuable tool used inconjunction with each other.