Stock TA: Using Multi Time Frame Analysis To Improve Results

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Updated March 2020Stock TA

Stock TA (Technical Analysis)

Stock Technical Analysis can be improved with Multi-Time Frame Analysis.

Multi-Time Frame Analysis is the analysis of a market over several timelines. For example, hourly, daily, weekly, monthly, etc.  The more timelines that are in agreement, the sounder the investing strategy and the safer the play. In essence, the idea is to determine the trend over multiple periods.  For example, in the daily timeline, we will look at a minimum of one year’s worth of data and each bar will represent one day’s worth of data. On a weekly chart, we will examine at least 5 years worth of data and each bar will represent a week’s worth of data. On a monthly chart, we will examine 10 years worth of data and each bar represents a month’s worth of data.  The idea is to get as many timelines to agree as possible.

However please remember that at the Tactical Investor,  Mass psychology is the tool we favour the most. We recently found a way to combine the best parts of Technical Analysis with the most important elements of Mass psychology and the end result is the Trend Indicator. This tool predicts the trend in advance and thus provides one with ample time to build up a list of stocks to purchase if the trend is up or a list of stocks to short if the trend is down.

Stock TA for Short to intermediate-term traders

Stock TA for Short to intermediate term traders

The focus here can be on the hourly and daily charts.  The goal would, therefore, be to wait until the technical indicators on both the hourly and daily charts are trading in the same ranges. If you are looking to go long, then wait till both are trading in the oversold ranges and vice versa

The focus should be on the weekly and monthly charts. When the picture (technical indicators) on both are trading in sync, this is the best time to open long or short positions.

Chart sources for Stock TA

In our opinion Trading view offers one of the best charting services on the internet for those looking for a paid subscription. While Stockcharts is great, their prices are significantly higher and than those of trading view with more or less the same functionality.

Trading View

Stock Charts good as a free source

Big Charts

freestockcharts

Google Charts

Futures traders can go to the following sites

Trading view commodity and futures charts

futures.tradingcharts.com

Final thoughts on Multi-time frame analysis 

The Trend is determined by employing trend line analysis. Do not confuse this with what our trend indicator does. The Trend indicator does not work by drawing trend lines; it re-calculates the trend and informs you when to go long and or short in advance of the development. In other words, you open long and or short positions before the masses even catch a whiff that something might be amiss.

Multi-time frame Analysis can be turbocharged if you understand that the main driving force behind the markets is emotions. Most players don’t base their investment decisions on logic; they based them on emotion. Emotions are what drives the markets. Thus if you understand what emotion is gripping the markets you can come out ahead of the crowd.

Bonus info on the Market July 2019

The markets are entering into what could be an irrational phase. How is this possible when so many players are sitting out?  The markets today are completely different from those of yesteryear, and so one has to be ready to look at the situation from various angles.  This hypothesis is based on examing the current pool of players that have skin in the game. This group could be getting ahead of themselves;  the investors that are already invested could be over-allocating funds because they have moved from the bullish phase to almost the euphoric stage. We already know that a large percentage are just sitting on the sidelines or betting against the market.

It is not a long term negative development, but if our hypothesis is valid, it could result in a sharp pullback over a short period, as over-exuberant individuals are the first ones to get nervous the moment it looks like the situation is changing.  However, this pullback will be a blessing in disguise as there is not enough firepower to “crash” the markets, and the sentiment is far from bullish.  Net-Net this is a long term positive development.

New Thoughts on The Markets Jan 2020

The markets are trading in the extremely overbought ranges on the weekly charts, so they are likely to pullback/consolidate. Therefore traders should understand that the media will use any event to blame the correction and then if it happens to be stronger than they expected they would start using the term “crash.”

If it is not the coronavirus, some other events will be blamed for the pullback/correction. The current sell-off was so minuscule that it was not even worth paying attention too. We would only start to looking closer if the Dow shed north of 1000 points and we would not be in the least worried even if it were to shed 2,500 points.  The trend is bullish so sharp pullbacks should be embraced.

We feel that the media is doing their best to push the “fear envelope” to the max in regards to the coronavirus epidemic. Before, anyone jumps to conclusions and  thinks that we are downplaying the situation, consider the following data:

8200 people died in the US during the 2019-2020 flu season; these are preliminary estimates from the CDC. http://bit.ly/2O7iuhU

The fatality rate for the coronavirus is currently 3%, and to date, there have been 106 fatalities worldwide. When you look at the data from that angle, the common flu would appear to be a pandemic in comparison. The outlook could worsen, but as one can see from looking at the data, the media, as usual, takes delight in stampeding the crowd.

New subscribers can now see in real-time why we issue entry points that appear to make no sense on first glance as over the last few days we were triggered into several plays. An investor is supposed to get into the stock at the best possible price; this means we should pay less for the stock the moment it is deemed a buy unless the stock is already trading at a steep discount.

If the pullback gathers momentum don’t make the same mistake you made last time; don’t flee for the hills and that is SOP (standard operating procedure) for the masses and the reward is usually a swift kick in the……,  add whatever choice words that come to your mind, but the outcome is usually unpleasant.  Additionally, if the markets do sell off, use this opportunity to take notes on what is going through your mind. A trading dairy, especially during times of turmoil, provides revealing data that one can use to improve one’s trading strategy in the months and years to come.Tactical Investor Market Sentiment

Bullish sentiment before the pullback stood at 46%; so it will be interesting to see what effect the pullback will have on market sentiment. The next update will be sent out on or before the 31st of January.

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