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Daily Digger - November 2006


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BQI-

 

For reasons known only to the candlestick gods, the American Bulls auto candle reader has done an astonishing job for timing on BQI.

 

$100 into $28,000 in two years.

 

Even with the real world slippage you would get on the trades its remarkable result.

 

Don't understand it and don't want to. It just works and it seems to work better than any other TA method imagniable for this particular stock.

 

http://www.americanbulls.com/StockPage.asp...cker=AMEX&TYP=S

 

Uh, it's a gimmick, the system exaggerates?

 

No, seriously Alceringa, I'm not knocking candle stick charting as I agree it's very useful, but there are several factors at play in my opinion that lead to such an exaggeration of gains. But first let me emphasize that any system including American Bulls, regardless of exaggerations, that provides a disciplined, successful approach to investing should be encouraged.

 

The major problem I see is that if you read the rules at American Bulls, you must wait for a "Buy Confirmation" or "Sell Confirmation." This can only be accomplished by waiting until the end of the trading session the following day of the "Buy If" or "Sell If" price. The problem is that A. B. uses the "Buy If" or "Sell If" price when tabulating gains. (This is not an honest assessment). If you follow their rules and wait until the end of following day to ensure the candle closes above the prior close, then circumstances would have you waiting for yet another day's market open to act. As traders know, stocks can gap up or down requiring the trader to sell lower or buy higher. Also there are the liquidity issues where the act of buying or selling has a large effect on price. So when you tabulate actual gains using practical buy and sell prices, the gains will be significantly less, especially compounded over a period of two years and especially when dealing with penny stocks. Penny stocks are much more volatile and the difference in a few pennies here and there are percentage wise very significant. Use BQI or a stock like ARU as an example to do the math.

 

Furthermore, the stocks with the biggest gains (such as heavily promoted BQI) started out as penny stocks that made big gains even without trading them. We can guess the small percentage of penny stocks that end up with enormous gains.

 

Third, the system can be contradictory. For example the liquid, arbitraged stock, MINEFINDERS, is currently on a SELL on the AMEX and on a BUY on the TSX.

 

If A.B. were to use the more practical "Buy Confirmation" and "Sell Confirmation" prices instead of the "Buy If" and "Sell If" prices, there would be a lot more Xed out signals on their 2-year tabulation of gains list and a much lower percentage gain.

 

Candlesticks are a great tool, and I like to use them in conjunction with trend lines, momentum indicators, fundamentals and a host of other aids.

 

goobsoverandout ;)

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golden stoolies.. I'm glad everyone had a great day today. Don't want to sound arrogant by any means but the last three posts I have put up on the board seems to have been correct and yet nobody ever provides any feedback. I guess I was hoping that another poster here plays the actual gold/silver prices instead of the gold shares. I hope someone speaks up otherwise I feel like I am talking to myself and no use in that! :D

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