Cabot Investors Conference 2013 Chart School! Mike Cintolo VP of Investments and Chief Analyst Cabot Market Letter, Cabot Top Ten Trader [email protected].

Cabot Investors Conference 2013 www.cabot.net

Chart School!

Mike CintoloVP of Investments and Chief

Analyst Cabot Market Letter, Cabot Top

Ten [email protected]


Primer

• Stream of Consciousness• Looking for Familiar Faces• “Seven-in-10 Rule” • Supply & Demand is the Aim


Daily Chart: More detail, less perspective

50-day moving average (thick black)

200-day moving average (thick green)

Stock’s daily movement

Stock’s daily volume

25-day moving average (thin black)

Chart is nine to eleven months


Weekly Chart: Greater perspective, less detail

Stock’s weekly movement

Chart is three years

Stock’s weekly volume

40-week moving average (thick green)

10-week moving average (thick black)

Earnings line


Market Timing: Trends the Key

Nasdaq Summer/Fall 2008

• Big Moves are What Really Count!• Simple, common moving averages work best

Cabot Tides Sell


Support/Resistance: Nope


Secondary

Measures:

Defense vs.

Growth

XLP – Consumer Staples (Defense)

SOX – Semiconductors (Growth)


Watch the Big

Leaders

AAPL January 2008

FSLR January 2008Nasdaq January 2008


Characteristics of Sound Bases

• 20% to 35% Deep Usually Best• Bullish Volume Clues• Many Weeks Long• Tightness at Lows and Near the End• Smooth Pattern


Buying: Bases and Breakouts

Bases = Launching Pads

Best if formed during Market Corrections

New issue

Tight

Vol Dry Up

Lots of “tails”

Demand

6 weeks up

10-week

RP confirms

CROX first base fall 2006


Base-Within-A-Base

If Base > 40% deep, expect multi-week, tighter base at end Tighter, proper structure

(25%, 16 weeks)

55% from top to bottom


Volume Clues

Market in Correction, AAPL building a base

Support

Gap Up on Big Volume


Volume Clues

When buying a breakout, want OVERWHELMING volume – 200% or more vs. average

GMCR up 40% (!) on 9x Avg. Volume

Up 60% in four months


In Gear vs. the Indexes?

AMZN new highs ahead of market

S&P 500


In Gear vs. the Indexes?S&P 500 in obvious, clear downtrend

MYGN out of gear, fails after market gets going


Big Liquid Breakouts

STP is liquid, in good group, stages big breakout – I missed it!

Always respect big breakouts from liquid growth stocks!


Buying: Stocks in Uptrends

6+ weeks up in a row a sign of persistent accumulation

13 weeks up in a row right as bear market ends!

Another 13 weeks in a row!


Smooth Uptrends

Notice how EBAY’s uptrend is smooth and persistent

EBAY doubled from this point during next 18 months


Prepare for Shakeouts

Big reversal on huge volume

Just a blip!

Don’t freak out over one- or two-day wiggles

Bull retreats usually sharp, brief = scare you out


Prepare for Shakeouts

Bull retreats usually sharp, brief => scare you out


Tightness a Good Sign

TASR advances 300% in next four months!

Light volume

Tightens up


Quiet also a Good Sign

Notice small, tight weekly ranges and dry-up in volume. The eye has come off the stock!


Selling is the Hardest Part

• You’ll either be Too Early, or Too Late• No One Perfect Rule • When in Doubt, Trail your Stop• Decide Ahead of Time How to Handle


Moving Averages

50-day line is a simple, effective trailing stop ... but it’s not perfect

A couple of shakeouts but adheres to the 50-day for months


Moving Averages

Weekly chart with 10-week line works, too

Sell on decisive break of 10-week line


Moving Averages

With a big winner you can use 40-week line (200-day) to give stock more breathing room

Hold through big corrections b/c huge profit

Sell!


How Far From Last Base?

Running for 7 months

Breakout

No set time is “too long” but > 6 months without consolidation is long


Out of Trend on Upside

Above multi-month uptrendHarder to define but can

provide a heads-up to book partial profits


Volume Resistance

Cluster of big-volume selling creates resistance in intermediate-term


Earnings Gaps

8 times out of 10, a crushing earnings gap => lots of downside ahead

Falls another 95% over next year!


RP divergence + Huge Selling

RP fails to confirm twice, each time followed by big selling


Two/Three Gaps in a Row

Two or three gaps after upmove can, at times, put in short-term top

Three gaps in a row


Cabot Investors Conference 2013 Chart School! Mike Cintolo VP of Investments and Chief Analyst Cabot Market Letter, Cabot Top Ten Trader [email protected].

Documents