Exclusive, Stock Chart Analysis - Free Intro Guide
Simply reading typical stock charts is like looking at a distant star. Investors are not interested in the past but the future. So understanding how to apply real information so as to maximize your trading and investment decisions profitably at any given time is the key. But many traders and investors do not really do this successfully. Here are some simple steps with our proprietary, exclusive market signal and charting system to show you how to do so:
Step 1: Always first identify the imminent direction, trend, and timing for entering and exiting trades for the overall U.S. equities market via the Garrett Trading Signal (GTS), the primary market analysis tool. Further details on the application of this tool are discussed below in I.
Step 2: Via the two secondary tools of securities analysis and sector analysis, identify the imminent direction, trend, and timing for entering and exiting specific trades within the overall U.S. market. Further details on the application of these tools are discussed below in IIa and IIb.
Step 3: If each of the aforementioned tools (the GTS primary tool for the overall market plus the two secondary tools) together conclude a buy signal, this is the best time to enter a buy position (or go long or cover prior shorts). The main takeaway is that there is maximum probability of profit with minimal risk to go long that security (built in margin of safety) at that given time because all three tools line up in harmony (think of when your stars align). Conversely, if each of the three tools listed below together conclude a sell signal, this is the best time to enter a sell position (or go short). The main takeaway here is that there is maximum probability of profit with minimal risk (built in margin of safety especially from risks of a short squeeze) at this time.
I. Primary Tool: (U.S. Equities Market Analysis): This is the realm of the GTS, your most important tool to primarily adhere to for any overall buy or sell signal in the U.S. equities market. What this tool indicates will signal what the overall trend of the U.S. equities market is. Consequently, the other two tools (explained in the following sections) must flow from this overriding indicator for optimal timing of any buy or sell decisions.
Here is how to properly interpret the GTS: the GTS will always flow between a score of 0% and 100% in increments of 10% therein. When the GTS hits anywhere between 70% - 100%, it is a green signal which indicates that the market is now on a maximum buy at that given time. Conversely, when the GTS reaches anywhere between 0% - 30%, it is a red signal which indicates that the market is now on a maximum sell at that given time while 40% - 60% is a yellow signal which indicates a neutral range where one should not commit to any action. In other words, the U.S. equities market will reach a short to intermediate term low when the GTS hits around 70% - 100%. The converse also holds when the U.S. equities market will reach a short to intermediate term high when the GTS hits around 0% - 30%. Buy low, sell high right?
Sometimes, you may find some backing and filling until the market reaches one of these two goal posts (green vs. red). For Market Street Smarts’ purposes, a trend is defined as going from the red sell area (0% - 30%) to the green buy area (70% - 100%) or vice versa. However, backing and filling is where there may be multiple readings in the yellow neutral area (40% - 60%) within the trend. This backing and filling simply denotes the current trend is not over yet! But each trend (from green to red or red to green) will always complete no matter how long and far it goes before the other one begins.
Here is a typical illustration one may find with the GTS in the context of real market movement: the GTS may go from 80% (a green signal giving a maximum buy) down to 40% (a yellow signal giving a neutral reading) back up again to 60% (another neutral reading) and then to 40% (another neutral reading) before it finally goes down to 30% or lower, only then indicating an outright maximum sell signal. Think of the path as two steps up and one step down. This makes sense as we all know the market does not move in a linear fashion.
Finally, one will find that the GTS tends to complete a trend from one end to the other usually over a span of approximately four weeks to four months. Hence, some trends may be much shorter in duration than others. Keep in mind though that the GTS only gives us information on the timing of the trends but does not gauge their heights and depths. Therefore, you will be able to identify the current trend and the timing of it but not how high or low the trend will go. However, once you get the timing down, the rest should fall into a "profitable" place. After all, timing is everything! Acting after the fact is just another form of Monday morning quarterbacking. Consequently, Market Street Smarts strives for us to be trend setters, not herd followers!
The next two guides to look to in the newsletter are your secondary tools. You will get more in-depth, time tested, securities and sector analyses that provide a trading strategy complementing the GTS.
IIa. Secondary Tool (Securities Analysis): The first secondary tool consists of Market Street Smarts’ 13-15 exclusive proprietary charts. Each chart consists of five technical elements. (If you think you need more information on any basic technical analysis, please Google any of the five technical elements found in this secondary tool.) Each element will be given either 1 for a buy or 0 for a sell. It follows that if a chart scores 5 out of 5, it is a maximum buy signal. Conversely, if a chart scores 0 out of 5, it is a maximum sell signal while 3 out of 5 is a neutral rating. However, maximum buy or sell signals alone on these charts will not be sufficient to draw any conclusions. Remember, this signal will need primary validation from the GTS. Always first follow what the GTS indicator is on. For example, if the GTS indicator is currently on a maximum buy signal (GTS between 70% - 100%), then any chart of a security scoring a 5 out of 5 will reveal itself as an optimal trade to buy. Think of it this way: it has the overall market's "wind behind its back.” In contrast, if the GTS is currently on a maximum sell signal (GTS between 0% - 30%), then any chart of a security scoring 0 out of 5 will reveal itself as an optimal trade to sell (or possibly short). Finally, Market Street Smarts strongly urges our members to execute any trade upon any buy or sell signal of a security or etf analyzed in this section no later than 5 - 10 days after its date of publication in the newsletter. Closing out the same position usually should occur no more than anywhere from 4 weeks to 4 months later max. Remember, you never go broke taking a profit.
IIb. Secondary Tool (Sector Analysis): For this analysis you will be provided with Market Street Smarts' utilization of 13-15 Bullish Percent Index (BPI) graphs. These BPI graphs depict the percentage of stocks within an index or sector that are currently on overall buy signals. According to the BPI, any stocks within an index or sector that are not on buy signals are automatically considered on sell signals. Do not worry if none of this makes sense to you. All you need to know about the BPI for your purposes is when they reveal maximum timing of buy or sell signals. This is all we care about: the timing for entry or exit of any positions. This methodology tends to reveal these signals via charts depicting when their "waves" crest (sell) or trough (buy). But again, this tool's information, as with the other secondary tool alone, will not be sufficient for us to draw any conclusions on what trades to enter or exit. Remember, one must get approval from what the GTS indicator says first. For example, when a BPI graph concludes a buy signal and the GTS is at 70% or above, this would be the best time for entry to buy into that sector. However, when a BPI graph concludes a sell signal while the GTS is at 30% or below, this would be the best time for entry to sell out of that sector.
What if the primary GTS tool and the two secondary tools are not on either all buy or sell signals? What should one do then? First, do not despair. One will, in fact, discover frequently that the other two secondary tools may not be in agreement with the GTS. In these instances of non-alignment of signals, one should conclude it would not be the best time for an entry to either buy or sell any security within its sector at that particular moment in time. Again, remember that timing is everything! There will be many times when one will find the best thing to do is remain patient and not force a decision. Many investors and traders fail precisely for this reason.
The GTS guides your patience and confidence for when to make timely buy or sell decisions. This may sound like a broken record but it is crucial to repeat: always first and foremost adhere to what the GTS is telling you. Overall, you must go by this first because it is crucial to know when the market is either in an overall rallying trend or a declining trend.
For example, let's say the GTS reached a maximum buy signal of 80% two weeks ago and one did not strike while the “iron was hot” to enter any position to buy. But today, the GTS indicator is currently down to 50%, a neutral reading. What does this now mean? It means you can still enter that potential buy position; however, you must understand that the timing is not as profitable as when the GTS was back at 80%. In other words, a rally is currently in place but there is more risk today than there was two weeks ago in entering the buy trade. Think of it this way: there is probably less time to profit from the trade as the trend is already well underway and you missed the best time to enter the trade to ride the trend up.
As an alternative, one can simply be patient and look for better opportunities at another time when the GTS gives us a maximum buy or sell signal again. There is one more very important caveat to consider under the Market Street Smarts’ system. If, for example, the two secondary tools still illustrate maximum buy signals, then one can still be fairly confident to enter the long trade at that time even though the GTS is giving us a reading of a neutral signal. However, please remember again that the trade may not be as profitable relative to its risk at that point in time too. Obviously, there are more possible scenarios between the primary and two secondary tools that can exist that have not been discussed here. But as previously noted, again always adhere first and foremost to what the GTS is informing you.
Most importantly, be careful not to misinterpret what precisely the GTS is telling us. For instance, when the GTS gives a reading in the buy range of 70%-100%, one casually may believe a bull market for the U.S. equities market is now underway or when the GTS gives a reading in the sell range of 0%-30%, one may think a bear market for the U.S. is starting. These are incorrect conclusions! In general, bull and bear markets refer to market trends over longer time frames lasting anywhere from about one to several years. The GTS indicator, in contrast, simply gives us the best (and most probable) timing for when the overall market is going to rally or decline in the immediate future, a trend lasting anywhere from the next few weeks to few months. These moves can and frequently do occur within the context of larger bull or bear markets. Hence, in a bull market, the GTS can and will give maximum sell readings and in a bear market, the GTS can and will give maximum buy readings. Ask yourself this question: does the market move in a straight line up or down over any reasonable time frame? Also, remember again that the GTS will not predict how high or low a short term rally or decline will go. That is why Market Street Smarts is not in the business of giving target levels on any index, stock or exchange traded fund.
Because of all the aforementioned, Market Street Smarts is also not in any way focused on day trading for its members. Market Street Smarts does not provide a day trading service because it does not believe it can trade consistently and successfully among other professional traders on a daily basis. Some people may find success in this trading style and if it works for them, that is fine. However, here at Market Street Smarts, we find those styles are not optimal. The “sweet spot” Market Street Smarts uses (in terms of duration of holding trading positions) is somewhere in between. The investment community usually refers to this generally as a "swing trading" strategy, that is, holding a securities position lasting anywhere from perhaps a couple of days (if not weeks) to at most a few months. Market Street Smarts focuses on this style and provides an innovative approach emphasizing when and how to enter and exit securities positions to optimally ride profitable trends up or down over this length of time.
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