Analysing Stock

[Stockbear]

I am aware that most investors use fundamentals to pick stock. Is there anyone who uses technical analysis? Does anyone use and plot their own graphs/charts?

I would like to learn and would appreciate any help.

Thanks in advance!

[c kenneths]

What I do is to simply draw up a page and check prices over the internet and place them daily on the page near the company names, after a week, I will review the price trends and try to read up reasons for their rise or fall. That helps my decisions about buying or selling. I do this for a month then I will change the sheet

[Stockbear]

@ CKenneths - Thanks for your input. I've been reading a book about the CAN SLIM system, but wonder if this applies to the Nigerian market? It has some solid advice in it, but I am unable to decide if using graphs as they suggest, and a bit of technical analysis can be applicable to Nigeria?

Especially since it requires access to current and valid data, which we all know is hard to come by.

I want to at least learn how to make a basic selection without having to run to or rely on a stockbroker.

[Stockbear]

What do you think about this?

NESTLE Plc & the Importance of Using Charts
Posted Thursday, February 22, 2007
The importance of reviewing the price trend of a stock using price charts to determine supports, resistances and breakouts cannot be over emphasized.

On February 9, 2007, Nestle closed at N241.20, a N12.8 (5%) decline from the prior Friday’s close of N254. In my weekly market summary, I indicated that the stock would have to trade above N254, a 52 week high originally attained by the stock on August 18, 2006 for it to move higher or break out of its tight consolidation range. For the week ended February 16, 2007, the stock closed at N245, a N3.8 or 1.6% gain for the week.


On February 19, 2007, the stock closed at N257, breaking above its N254 resistance. This price would have been an excellent entry point for investors who wanted to be “long” the stock. Subsequently the stock closed at N260 on February 20, 2007, and N272 on February 21, 2007. The stock has gained N18, or 7.1% in the last 3 days. My apprehension is that the breakout has been on light volume.

For example, the stock gained N12 today on trading volume of 44 thousand. Today’s gain on very light volume is not convincing for a stock with approximately 528 million shares outstanding.

I hope this is not a false breakout. However, the stock has a strong support at N254.

[c kenneths]

The CANSLIM strategy is very applicable in the Nigerian environment, but I look at it as a combination of both technical and fundamental analysis. In the NESTLE example, I had said somewhere in this forum that the market has a mind of its own. There could be resistances and breakouts which I still know is a direct result of buying and selling decisions of the thousands of investors trying to outsmart each other.
But the real question is, how can you use charts to measure the decisions of thousands of people, all with different objectives, ideas, deadlines and goals?
For instance you are looking at charts and every indicator shows you that a stock has broken its resistance, if a big shareholder, with millions of shares, decides to sell all his stocks for reasons best known to him, the share prices must fall and it will violate the resistance.
I like things when they are simple. If its too complicated its will surely make less money.