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Hi Crazies,
You know what Chartism is, don't you? The study of how a share is likely to go - up or down - by looking at the way it's behaved in the past.
This is recorded by those graphs on the wall you see in business cartoons. The little line that goes up steeply or falls like a miner down a shaft.
Except that in real life the line does not go straight up (mores the pity). It is however more likely to go straight down. A profits warning can do that. Or a sudden case of fraud.
However, most lines of progress go up and down in bits and bobs, making a wavy line. Sometimes this wavy line seems to go up most of the time, sometimes it comes down most of the time. And often it makes peaks and troughs like a mountain range.
Chartists read these mountain ranges and make predictions. Some of these configurations are really complex and I don't bother with them. I should - but I don't, because I am a lazy old punter.
So there are only two lines I look for in a graph which tell me that a share has a good chance of increasing in value. The first line is a general trend up, rather like a stair case.
It does not matter how many times the line suddenly dips. I merely draw a line through the peaks and if that line slants up, rather than down, I buy the share.
If it gradually comes down, I wave a quick goodbye to the share.
The other thing I look for in a graph is the double top. If a share hits a peak, falls away over many weeks or months, and then starts heading north again - it will eventually form a double peak, twin mountains. The trick is to buy in before the share hits its second peak.
There you are then, gang. A very simple guide to Chartism. It might, by the way, not work. Many analysts think it is a load of old toffee. Not this old punter - but as you known, I'm not always right.
As everyone is quick to remind me - in the Punter's Return!
To find out more about Malcolm CLICK HERE
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