Technical Analysis of Stocks and Gut Feelings

Currently, I am looking at various stocks to see which trade I am going to place next. I use technical analysis, the news, and my gut feelings when making a trade.

These are the stocks and industries that I have researched today, in no particular order:

Industry

• Gold; 
• stocks - MGH, VGZ, JAG, BRD, GG, NAK, RBY, and GGN

Industry

• Paper Products
• stocks - IP, XRM, BZ, and KMB

Industry

• Aerospace/Defense Products & Services
• stocks - HON and GR

A part of my investing is based on gut feelings.  This probably sounds unprofessional, but there is something to be said for the internal voice that is saying "go for it" or "run for the hills".   For me, it stems from the overall sentiment that I am getting from the news and the people that I am around.  There is this nervous energy that I pick up from people when the markets are about to turn for the worse, or an excitement that things are looking better when stocks are going up.  Instead of ignoring the internal voice, I listen to it and then back up my feeling with data.  My personal fear can mess with my gut feeling, so I look at the data in order to prevent fear from stopping me from progressing.

The definition of technical analysis as stated on http://www.investopedia.com/ is the following:

"A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity."

 Personally, I enjoy working with charts. It is a LOT of fun for me.  I explained a little bit about technical analysis on my Stocks and Stock Options page.  Our family uses software that allows us to play with stock charts.  This includes the ability to add trend lines, include different studies (examples are: MACD, Stochastic, Moving Average, etc.), and change between a line graph and a candlestick graph.  I do not have time in this post to explain this in detail, so if you are interested in learning more please look up the definitions on the Internet or in books.

What I am seeing in the charts today:

I saw several interesting things in the charts that lead me to think particular stocks are going to trend downward in the near future.  This follows information that I have been hearing in the news.  In particular, I chart Moving Averages for stocks at 30-days, 90-days, and 200-days.  What I am seeing is, on the daily graph, the 200-day line (green) is crossing above the 30-day and 90-day lines.  Along with this, the 30-day (red)  line is crossing below the other two.

IP stock has followed the pattern shown above.  I think it might have short little runs up, but over the next 6 months to a year the long term trend is down.  The stock price for the last 22 days has been below the 30 day MA (red line).  When the stock price consistently stays above the red line, and the red line crosses above the 90-day MA (blue line), then look for the longer trend to be up.

I am leaning towards trading HON stock. I like its dividend, and I recently read that it has signed an agreement with China to send them parts to make their own airplanes.  The article I read stated that China currently purchases its airplanes from Boeing, but they would like to be able to build their own.  This stock was also strong during the Great Depression.

When I finally decide what I am going to invest in I will display the information on the Stocks and Stock Options page.