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I am a highly motivated professional who strives for excellence in all aspects of my work and life. An ideal career would provide me an opportunity to learn continuously. Having strong skills in communication and problem solving allows me to work well in a team or, in an independent environment.... More
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  • Technicals + Fundamentals + Growth = Successful Trades 0 comments
    Sep 4, 2009 07:24 PM | about stocks: SYNA
    Any half-witted investor will consider the fundamentals of the company before even considering a potential trade or investment. The standard measurement of strength or weakness for a given company will typically consists of the following statistics:
    These elements used in combination with financial news and quarterly calls are often the main force driving the stock price on any given day. The problem with all of this data it is almost always too much information to process and usually results in a very confused investor. Some important questions to ask yourself are:     How do we determine which information is relevant at the appropriate time? And w    hat can we do to differentiate between informed decisions over luck or randomness? 

    Technical indicators are one method that investors often use to scale down the flow of information. It is a way to summarize or translate the raw information into a form that can be easier to interpret. Although they are only indicators, which means that they only "indicate" and do not serve as any kind of guarantee.

    Graphical overlays such as     Bollinger Bands and Candle Sticks can be useful in identifying support / resistance prices and short term trends respectively. On the other hand, there are technical modules such as the Williams %R,  the KDJ, and the Relative Strength Index, which are often used to identifier stocks that are overbought and oversold. The important question is, when to use these indicators and at what time. From my experience, it seems that most stocks tend to have higher activity around their quarterly calls. These are good opportunities to take advantage of the volatility that might arise due to misalignments with independent analysts. 
    The following graph is an illustration of a true positive from a KDJ indicator. Here we have a six month price history for Synaptics (SYNA). Between the months of June and August we notice that the K, D, J lines begin to converge and the stock price was dabbling around its 52 week high. From this point, it only takes a couple bag segments of news for the stock to take a drastic downward spiral as it did on July 30th.
    Disclosure: Long SYNA.

    Themes: technicals, fundamentals, success, trading, shorts, options, puts. Stocks: SYNA
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