Bulls Bears and Discos

31st Jul '23 by The Brass Monkey

9 comments 546 reads

I've just finished reading Stan Weinstein's 'Secrets of profiting in Bull and Bear Markets' which is the first technical analysis book I've read 10/10

Most investing books I've read to date have been based on fundamental investing. I've got to say the principles put forward seem very compelling.

My immediate question is given this book was written in the 70's and based on the US market, do the principles apply Today in the UK?

Stage analysis, 30 week moving average, relative strength signals, volumes strength etc or will the indicators described just leave me sat on the side line waiting for something which is never going to happen or worse lead me into a whole world of pain because it's no longer a relevant strategy.

Any suggestions on what to read next?

Is the best approach to try and combine fundamental analysis with technical analysis and time entry and exit into an attractive stock that meets your criteria based on chart signals or is it better to decide which camp you sit in either focusing on fundamentals and ratios dismissing charts as voodoo nonsense or visa versa not caring what it's called or what it does if the chart says buy get in there and ride that trend till it reverses do worry about P/E rations and all that jazz.

Thanks in advance

TBM

Ps. In case it's not obvious by my question, I'm a newbie trying to figure out who I am and what my approach should be

PPs. My wife has already made it very clear I'm not allowed to get a perm like my new found hero Stan!

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WarrantStar

31st Jul '23

I think it's better to use both approaches together. I use fundamentals to select the share and I use the technical analysis to time my entry & exit. This approach often leads me into a situation where the share look fundamentally attractive, but the technical analysis does not. In which case I put the share onto my watch list and wait for the technical analysis to improve before buying. Sadly this scenario does not always work out and the technical analysis doesn't improve within a reasonable timescale. But at least in this scenario I can console myself that I made the correct decision not to invest, and have not had to suffer the pain of watching my investment evaporate!

William K

One very important point - Stan uses the 30 week moving average rather than the 30 day moving average to decide when a stock is going into decline.

A second point - the US market is very different from the UK market. Whilst the broad principles of Stan's book applies to most markets, it was specifically written for the US market. 99% of US investors don't know that the UK has a stock market, and those that do are not interested (at least that's how it seems).

As for the vexed question of TA vs FA, I think others will answer that better than I do. (I only use TA so I'm biased!)

The Brass Monkey

Thanks William, your absolutely right I've corrected it to say 30 week MA. As someone who only uses TA do you have yn recommendations on books to read or UK principles to follow

1st Aug '23

Hi TBM. Perhaps one of the most useful and readable books on TA (amongst other things) is The New Trading for a Living by Dr Alexander Elder. (It's expensive at £53 on Amazon but worth it IMHO). The best Youtube teaching about TA is on Financial Wisdom Channel. (10-15 minute episodes delivered very clearly and attractively.) My advice would be to know a few strategies well rather than many superficially. MACD and moving average strategies are basic. Don't use any strategy you don't fully understand. The essentials of TA apply to the UK market (and all other markets & commodities).

Rusty2

I did have a look Weinstein's strategy in the UK markets, a few months ago. I did struggle to find stocks met the criteria. Volume was often missing. There does seem to be a lack of momentum in the UK markets at the moment. Momentum has performed poorly over the last 2 years.

The markets are quite different from the US, there is more volume there, stocks are generally larger. Large stocks there can gallop, some large caps are up over 100% this year.

One small point, the chart should be set to weekly not daily, it does make quite a difference on some stocks.

4th Aug '23

Hi William thanks for the recommendations and advice, really appreciate your help

Useful observation the momentum in the UK and thanks for advice on timeframes

KevinS1

Thanks for the recommendation. I have found a copy of it for much less when searching Google. I look forward to receiving it in the next few days once it has arrived from India...........

6th Aug '23

I did have a look at the top Momentum stocks on Stockopedia and there have been quite a few that would have worked, such as Marks and Spencer (LON:MKS) and Rolls-Royce Holdings (LON:RR.). If you look at top momentum stocks, then charts, set it to weekly, then add 30 week MA, you will see which would have worked, I did pick up a few of them but missed quite a lot.

Some have the volume missing. I will be looking at the Weinstein strategy more, with a view of using more on my investments. It will work better in a bull market though.

Bulls Bears and Discos

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The Brass Monkey

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