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 Technical
Analysis Basics Can Help You Avoid Larger Losses
by Kenneth J. Gruneisen,
Registered Principal, Source Capital Group, Inc. Members
NASD/SIPC
Example #1
For a perfect example of how an understanding of
technical analysis can help you avoid suffering larger losses, take a look at
the attached charts of Ford Motor Company (F-NYSE). Technical analysts
know that when a stock is breaking down to new lows on heavier trading volume
than normal, more often than not the situation is going to get a lot worse
before it gets better (if it ever will get better). On Ford's daily chart when
it recently broke to new lows under the previous lows ($14.88 on 4/8/02
and $13.90 on 2/7/02 were previous lows) ) it was clearly a bad technical
failure.
In its weekly chart you can see an earlier
(8/17/01) breakdown that gave investors a "sell signal" in the low $20's.
No need to be wondering what to do with Ford trading near $7.00 today
(10/9/02). You would have already been out of Ford if you had been able to
recognize the messages it was giving you simply through looking at its chart.
Example #2
Follow
up to November 2002
CANSLIM.net
News
Article
HMO
Tenet Health Care Provides a Great Example
of What to Watch Out For
At
the start of this month the November 2002 issue of CANSLIM.net News included an example of "What to Look Out For" including remarks about the HMO stocks, and specifically highlighting Tenet Healthcare.
In regard to HMO stocks we reiterated that "the group has shown numerous reversals and signs of topping."
Fast forward to Friday, November 8th, when Tenet Healthcare (THC
-46.69%) dealt the healthcare sector yet another blow. A slew of brokerages downgraded the stock on news of the departure of its CFO and COO, both of whom suddenly decided they want to spend more time with their family. THC will now have to revamp its management team in the wake of questions about its Medicare reimbursements.
This is a great example of how CANSLIM.net News helps
subscribers! In this case we showed more about the anatomy of a breakdown,
pointed out some sell signals to recognize, and helped
some folks avoid devastating losses!
In order to make profits you must first be able to manage risk and know how to preserve your investment
capital. Get
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about Technical Analysis by ordering a
subscription to CANSLIM.net News
below.
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