Remember stocks have to breathe. They inhale and exhale. When they breathe, they leave zigs and zags on a chart. They look random and indecipherable, but after closer inspection they have distinct patterns and always leave clues to their overall motive. Just imagine your the crime scene investigator working for CSI and you must solve the mystery. You're always looking for the tiniest clues to solve the puzzle and constantly reviewing any new evidence to support your hypothesis. Stock chart analysis is part art and part math. Stock numbers (part math) are transformed onto a piece of paper that displays a graphical image (part art). Now with that said, let's put on our detective hat and do a practical exercise. Look at the Silver chart (see below) for the past 12 months and draw a line across all major high points and all major low points on the chart. (See chart #1)
Silver Chart#1
Wow.....After we drew a simple line across all the major highs and major lows, this chart came to life. This chart is now exploding with information. The first question you must ask yourself is the stock trending up or down overall? The second question is where is the stock inside the overall trend - at the top or the bottom of the trend? Now look at the chart. Where do you think Silver prices are headed in the next three months? Remember, this is chart analysis 101.
Before buying any stock, mutual fund, ETF, or any other bullshit you can dream of. Print the stock chart and look at it! You should never ever invest a dime without looking at the chart.
The chart does not lie only brokers do. Please post your price forecasts in the comment box.
There is no right or wrong answer.
Practical exercise # 2 . Now take a look at the DOW chart. Use the same concept as we did on the Silver chart. Where is the DOW headed? Please post your price and trend predictions in the comment box.
3 comments:
The price of Silver is rising and the Dow is declining.
How can you tell if they are in the top or bottom of the trend? I guessing top of the trend is toward the end of either rising and falling and bottom is the start of rising and falling?
yep, your right on target. Silver should be nearing it's low around 11.80 to 12.80 and should move back up between 14 to 16 dollar range. The Dow is about 50 to 60 percent through it's cycle and should test the 6600 low by 16 OCT or earlier. Remember, these are not normal markets. Silver is currently being hammered (naked shorted) by the major bullion banks. i.e. jp morgan chase and a few others. All markets are manipulated, but the manipulation in the silver market is extreme and is in the process of unwinding. Futures prices of silver could go parabolic. I will do a post just before the price sky rockets. When this happens, the price should triple easily. I will flash a buy post just before this happens. It should happen on the October contract. I'll keep ya posted.
Sounds great. For me I like seeing the price of silver fall because I can buy more since I'm just starting to get involved in precious metals investing. Great blog btw. I come here everyday now.
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