Courtney Capital… DECEPTION AND CHARTS

Written and presented by David William Paul

Courtney Capital

• In the following short presentation I will detail several simple patterns for short term swing trading

• They are all traded with the trend and should be

applied to shares that can grow earnings strongly and

safely for a 80% hit rate. • If the fundamentals are technical position are not in

sync the hit rate will fall markedly.

• I want to be “long” undervalued stocks and “short of

overvalued stocks.

• My undervalued stocks have not budged in this market blues.

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• I am looking to build a hit list of undervalued shares that have high earnings growth potential

• These shares must have a good track record of

growing earnings safely and consistently.

• The VectorVest software does this automatically • If you wish to be a position trader the you need

nothing more.

• If you wish to be a short term trader over a few days

with leverage use the following concepts with

undervalued safe stocks. The results will surprise you.

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• I use a 21 period average and a 89 period to determine the trend on all my charts

• In addition VectorVest measures the short term trend

and the breadth of the advance of the total market

• A chart of Bidvest is shown next which looks at a

typical layout.

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BIDVEST DAILY

Lost Motion

• W D Gann in his published work talks about the merits of trading double bottoms.

• A double bottom that’s not perfect he called “Lost

Motion”

• In the slide below notice how the share takes out the

low and then reverses.

• Trade it with the trend and with the fundamentals

Lost Motion

Lost Motion-against the trend

Supergroup

Pinnacle

Lost Motion preceding a 10/40 cross

Euro $ …this morning…

Trend is up. Market nails the obvious stops This is where the liquidity is sitting

GOLD

Trend is down market stops all and then falls

Deception and Charts

Lost Motion

• Lost Motion is the basis of a lot of my trading.

• The following pattern is Lost Motion in disguise.

Bar Chart patterns

• I have spent years researching bar chart patterns and have largely kept to myself.

• In my opinion they have a better hit rate than candle

patterns but I appreciate that is a controversial view.

• I use them every day in my trading of stocks, stock

indices and forex. • I will include examples from all asset classes.

• With the trend the trader needs little more.

Multiple Outside Bar

• This is where a bar completely engulfs the highs and lows of the last three bars.

• Its a very strong formation.

• I include a trade on the Dow cash which happened recently.

• Let the market close above the range of the outside

bar and Buy/Sell at the open of the next.

• Stop is a long way away at the low of the outside bar.

• This means that a small position will need to be traded

as the stop is large.

Multiple Outside Bar

This This bar engulfs the previous three

Buy this open

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Multiple outside

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Top in AGL

FT100….. today

Short at the open Nice quick loot

Two Bar Outside Reversal

• This is the most amazing little pattern

• Its simple. The markets makes a new high and then

reverses and closes below the last two closes.

• The market makes a new low and then closes above the last two closes.

• The pattern happens frequently. On the Jse-Alsi40

future there are two of these a day on the 30 min

chart.

• In forex define the trend and take 2 bar outside reversals in the direction of the trend.

Two Bar Outside Reversal (long)

Initial Protective Stop – Low of key reversal bar

Enter on the next bar

Close higher than previous two closes New Price Low

Two Bar Outside Reversal (short)

Initial Protective Stop – High of key reversal bar

Enter on the next bar

Close lower than previous two closes New Price High

Two Bar Outside Reversals

Cable makes a new high.

Then it reverses and closes Below the last two closes

Two Bar Outside Reversals

Text book

Two Bar Outside Reversals

Two bar outside reversal at work

BUY

Short trade

Popgun (long)

Initial Protective Stop – Low of Outside bar

Enter on the next bar

Outside Bar

Close above high of Outside bar

Inside Bar

Popgun (short)

Initial Protective Stop – High of Outside bar

Enter on the next bar

Outside Bar

Close below low of Outside bar

Inside Bar

Multiple Inside Bars

• The pattern is simplicity its self.

• The market trades inside a bar for a minimum of 3 bars

• Its breaks and closes above the range of the formation

as shown in the next slide. • Enter on the open of the next bar.

• Place a stop below the low of the bar prior to the

breakout or setup bar.

• The formation does not supply any information on targets.

Multiple Inside Bars (long)

HIGH

LOW

Initial Protective Stop – Low of bar preceding breakout or setup bar.

Enter on the next bar

Close above high of bar that

encompasses the inside bars

Multiple Inside Bars (short)

HIGH

LOW

Initial Protective Stop – High of bar preceding breakout or setup bar.

Enter on the next bar

Close above high of bar that

encompasses the inside bars

Multiple Inside Bars Trades inside for 5 bars

Short here

Multiple Inside Bars

Sell this open

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