Recommendation medium term
Gasoline, NYH RBOB is within a rising trend, which indicates a continued growth. Has given positive signal from a rectangle formation by a break up through the resistance at 1.55. Further rise to 1.83 or more is signaled. The future is approaching the resistance at 1.67, which may give a negative reaction. Poor liquidity (traded 100% of the days, mean 0.07 mill per day) weakens the analysis. The future is overall assessed as technically neutral for the medium long term.
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For over 20 years our mathematicians and statisticians have developed computer systems that analyse market psychology. Investtech's analyses are independent of investments firms, banks and the stock companies, and make an important complementary addition to, or replacement for, fundamental analysis.
Investtech works on methods and strategies for financial management. The company’s goal is to provide good decicision support for both private investors and large financial managers. Mr. Geir Linløkken is Head of the Research Department. He graduated the University of Oslo in 1995 as cand.scient in computer science with a specialization in mathematical modelling. He established the analysis company Investtech.com AS in 1997. Mr. Linløkken has worked on behavioural science and automated systems for technical analysis since 1993, and in 2001 he wrote the book "Technical StockAnalysis - for lower risks and increased returns."
Investtech’s proprietary algorithms identify rectangle formations in price patterns. Buy signals from such rectangle formations are considered robust and reliable, with a hit rate of close to 70 per cent.
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Use technical analysis to:
Technical analysis aims to predict future price movements. The prediction is made through understanding investors’ psychological changes and thereby predicting increasing and decreasing optimism and buy interest. The analysis method is used both on individual stocks and indices.
Through the use of good tools, technical analysis is an objective form of analysis that gives concrete suggestions for purchase or sales. The method is easy to use and does not require great understanding of each company and each stock traded.
Investtech’s research shows that this method used over time gives good statistical opportunities to beat the market.
There are two important factors to keep in mind: objectivity and long term perspective.
Objectivity and simplicity are absolutely necessary, which means that analyses and advice have to be specific and leave no room for interpretation. Technical analysis has historically been a big toolbox with a great number of indicators and models with a range of parameters. This gives the opportunity to always find almost perfect models for specific stocks or periods of time, but it will rarely work in practice. It is even worse if working without quantitative tools, i.e. by just looking at the charts, drawing trend lines and identifying support and resistance on your own. You will easily see what you want to see and what fits in with your subconscious understanding of the stock. This can easily lead you in the very wrong direction, and you may end up being ruled by your own emotional fluctuations, such as greed and fear of loss. These are the exact psychological fluctuations we will profit from by the correct and patient use of technical analysis.
A long term perspective is also key. A very important characteristic of technical analysis, of all stock analysis, is the high uncertainty. You will never be especially certain of a specific outcome. Aim to be right a little more often than wrong, or even better, to make a little more money every time you are right than what you lose every time you are wrong. Technical analysis helps you side with the more likely outcomes. If you are right 55 per cent of the time, be happy!
But of course it is the nature of the stock market that maybe 6 of the first 10 trades go wrong, or you lose compared to the market in the first year. It is easy to start doubting the methods.
A common pitfall is changing your strategy and not trusting the statistical results when failing to achieve immediate success. Obtain a solid foundation for the strategy you choose, preferably both statistical/quantitative and through psychological/financial explanations/theory and FOLLOW YOUR STRATEGY.
Technical analysis itself is enough. Some even feel it’s a disadvantage to use fundamental analysis and paying attention to news streams and forums. It is easy to start doubting technical signals and quantitative recommendations. Technical analysis is based on the principle that all relevant information is expressed through the stock price movements. Profit is made from the lags and overreactions in the market.
Nevertheless, using fundamental analysis in addition to technical analysis may make you more confident about your investments. This may help you sleep at night. Ideally you want to buy stocks both because
1. they are fundamentally cheap and
2. investor demand is increasing.
Investtech recommends analysing insider trade quantitatively, where available, and taking it as fundamental analysis. Insiders buy stocks and put their own money into their own company when they feel the company is fundamentally cheap.
We have years of thorough research and results from real investments in the market that demonstrate that disciplined use of technical analysis with Investtechs tools have given good long-term results.
Technical analysis is especially well suited for private investors. Smaller private investors can enter and exit a stock quickly and are thus well situated to profit from technical analysis. We recommend the following procedure when deciding to try technical analysis:
Investtech guarantees neither the entirety nor accuracy of the analyses. Any consequent exposure related to the advice / signals which emerge in the analyses is completely and entirely at the investors own expense and risk. Investtech is not responsible for any loss, either directly or indirectly, which arises as a result of the use of Investtechs analyses. Details of any arising conflicts of interest will always appear in the investment recommendations. Further information about Investtechs analyses can be found here www.investtech.com/disclaimer. The content provided by Investtech.com is NOT SEC or FSA regulated and is therefore not intended for US or UK consumers.