For GT Blog November 27, 2008

A word on Technical Indicators

I was never a squiggly line guy, studies like Average Directional Index (ADX), Bollinger Bands, Moving Average Convergence/Divergence (MACD), Moving Average Envelopes, Parabolic (SAR), Relative Strength Index (RSI) and Stochastic Oscillators can be messy.

I like “clean” studies like divergence and trend lines.

Price divergence between two plots will occur when one fails to follow the other to a new trading high or low – note the failure of the TSX Energy Index to follow crude to new highs in mid July – setting up a “sell” signal.

Now note the failure of the TSX Energy Index to follow the price of crude to new lows over the past several days and in turn setting up a “buy” signal.

Bill Carrigan

Bullish Positive Divergence for the Energy Stocks

For GT Blog November 21, 2008

Opportunities in Natural Gas plays?

On a relative basis natural gas is much stronger than crude

The strategy would be to focus more on the natural gas producers and less on the crude producers. For a list of gassy producers and gassy income trusts, email Darren Carrigan dcarrigan@union-securities.com

A higher risk play would be the Horizon Beta-Pro Natural Gas Bull (TSX-HNU) - be careful, this product is VOLATILE


Natural Gas Vs. Crude

For GT Blog November 17, 2008

A word on Double Bottoms

The double bottom is a major reversal pattern that forms after an extended downtrend. The pattern is made up of two consecutive troughs that are roughly equal, with a moderate peak in-between

Sometime the right bottom is higher than the left bottom – but the volume must be greater on the left bottom in order to be valid

Caveat: Our Encana example is probably valid but is flawed in that the lows are very close together but the volume pattern is compelling


Bill Carrigan

For GT Blog November 12, 2008

Here we are at 3pm Wednesday November 12 and the TSX Composite is down 476 points - and when I look at the most actives I see nothing but red ink

Wait a minute - the forth most active - Bombardier is unchanged

Could it be the market is waking up to the beginning of a new dominant theme? A theme that will replace an old dominant theme?

The "old" dominant theme was the post war automobile - super highways and urban sprawl boom - and is now a broken model

The new dominant theme is one of mass transit - subways and commuter trains
The Bomber is the beneficiary and the global auto manufactures are the bag holders.

For GT Blog November 05, 2008

Technical Indicators - when, how, why

One of to-day's most popular and over-used technical study is the MACD (Moving Average Convergence/Divergence): An indicator using the difference between two exponential moving averages. The difference is plotted as an oscillator.

It is best used on WEEKLY charts

The problem is most investors use the MACD incorrectly and will get trapped by a false move

The best way to use the MACD is to look for a divergence set-up.

That means the PRICE makes a new high and the MACD fails to move to a new high (bearish)

OR - the PRICE makes a new low and the MACD fails to move to a new low (bullish)

Note the bullish MACD setup on Rogers