One of the most important features I use in my analysis are trend lines, formed by connecting highs and lows on the types of graphs just mentioned to try to discern a directional move, as well as potential stumbling blocks on the northerly end or possible rebound regions on the southerly side. I’ll draw those lines from several different angles, not simply extend them from a stock’s or market’s major high or major low. I’ll often extend my trend lines from a secondary peak or trough following those major highs or lows. In some cases I may even go back to a low preceding a major low or a peak preceding a major peak.
The key is to find trend lines that connect the most regions over the longest time period at a reasonable angle of ascent (or descent). The only way to try to get a feel for trend lines is to practice drawing them—hundreds and hundreds on a variety of indices and individual stocks until your fingers are ready to separate from your hands. Your primary tools will be a pencil and ruler if you’re printing the charts yourself or subscribing to a chart service that comes via standard mail, or a technical analysis computer program where you can draw them on the screen—coupled with a respect for the market and a belief that its movements speak louder than any analyst or commentator on the face of the earth. Computer charting software packages are plentiful, and I suggest you search the Internet for the highest-rated ones and research them thoroughly should you be interested.
You can see that technical analysis is never a one-size-fits-all approach. So many investment variables exist, not to mention the different weights of import that millions of market participants with vastly differing investment personalities assign to each.
So where does this leave us as I bid farewell and you decide which investment path to follow? It leaves you at a crossroads in your investment pursuits with important choices to make—very important choices.
The investment arena encompasses far more than your capital. Of course, making or losing money is the end result, but as we’ve discussed throughout this book there are other, nonmonetary factors at work that can significantly impact your investment performance, namely in the psychological and relationship realm. Don’t forget that!
I’ll end with the words I used to describe my mission in authoring this book back in chapter 1: I hope that by reading this book, you will be better armed to successfully compete in that huge, volatile arena known as Wall Street. I’ve seen more market participants financially hurt over the years than I care to remember. If I can assist the individual investor by authoring a book that “tells it like it is,” using life’s experiences to help simplify the Wall Street maze, then I have taken a step toward repaying the many investors, analysts, brokers, and caring friends who helped guide and support me over the years along the market’s always tricky path.
Relationship Investing Page 13