I've gone back and forth between value investors -- like Buffet who never use charts to buy stocks, and the legends like Livermore who only use charts.
Eventually, everyone develops their own style. I think I'm working on combining both -- but it takes time. The best way to combine value and technical investing is -- I think -- to focus on swing trading. Using the index charts as a guide to determine the kind of market we're in -- I can then select value stocks and ride them with the prevailing trend.
Lately, many of the China stocks I own are dying -- I lost money today with the market up. What I'm noticing is that many of these stocks need to raise money and it seems they continue to do these sweetheart deals that really screw over shareholders. Thus, these stocks constantly trade at 5x earnings at best. You can't use fundamentals to know when it's coming, but the technicals often signal the big Screw Job is coming.
CSR, LPIH are the latest names to sag. I think BSPM is setting up now for some kind of offering. NEP has been dead since its offering. At least I recognize the trend is down. I'm 50% cash now.
I have been falling in love with these microcap names instead of being sharply cynical. I let my guard down as the profits rolled in. Foolish. Fortunately, I'm up for the year. I am not vulnerable to a huge drop now -- but still vulnerable.
My powers of perception are growing.
Today was a wild day -- but I don't often daytrade. It's not my style.
The main thing I realize is that stocks only go up for a limited time. You have to focus on the big swings and not be afraid to get out at the top and maybe give up some upside (for the liquidity).
There's a lot of hype out there but the Charts never lie -- so you need to listen to them always, even if you decide to ignore them. Good stocks do not go up in a bad market. The charts will tell you it's a bad market. (It is now!)
Be cautious of gurus - especially gurus on a 'hot streak'. Hot streaks always end, and they usually end badly.
Currently -- I have a bad feeling in my gut. It's hard to just short though -- as today ended green and probably would have killed me on FAZ. So I'll stay 50% cash until I think it's worth getting back into the market. No rush. I never want to feel rushed.