Do buy stocks with good technicals? Here’s how you can do better…
Techno-Fundamentalist – Ric Miller Ph.D
My preference has been to trade a watch list of fundamentally
sound stocks, because they tend to be well supported by institutional interest
at key technical levels, e.g., 50- and 200-day moving averages, key Fibonacci
levels, etc.
Specifically, I buy upward trending, fundamentally sound stocks at pullback reversal points. The modeling work presented here explores the impact on profits and risk of five pullback factors: (1) pullback depth measured from the high 4 days ago to today’s low, (2) first profit point (2.5 or 5.0%) where the first half of the position is sold, (3) trailing stop length (2 or 5 days) for exiting the second half positions, (4) final stop loss percentage (5 or 10%), and (5) pullback type (either one making three lower lows or a 5-day minimum).
Read More