clearer picture after removing the noise

Hi folks,

By moving up a higher time frame in charting ie using the WEEKLY chart of CTO we can get a clearer picture of the overall price movement of the stock. Much of the noise can be removed when we view CTO from the weekly chart as shown below.

The price movement of CTO, or indeed any stock, starts when smart money begins to flow into the stock. This is represented by a buy alert(blue dot), when smart money flows into a stock, normally unawares by the investing public, or by a sell alert(red dot) when smart money flows out of a stock like CTO.



Normally a day or two after the buy alert or sell alert is sighted ( if we use a daily chart, or a week or two later for weekly chart ), the investing public catches the price movement and follows suit in investing or trading the stock. This trading action causes the trend of the stock to change into a confirmed uptrend ( blue line) or a confirmed downtrend(red line), and occurs soon after the buy or sell alert.

For example, by refering to the chart above, you can see these signals.

In cases where the buy alert occurs together with the confirmed change in trend, a strong uptrend or downtrend occurs. ( see the buying signal in Dec 2008 in the chart).

Now let us take a look at the current situation.

We can see that in early May 2009, a weekly BUY alert was sighted, suggesting smart money has begun to flow into this stock after a long down movement. We can see that the trend is still down as denoted by the red line in the price chart. However, we can see that the price chart has since turned horizontal or sideways, which is often the case just before it turns blue.

Since we have already sighted a weekly blue dot buy alert, the sighting of the blue line in the weekly price chart will suggest earnest buying to begin as the uptrend will thence be confirmed.We are now earnestly awaiting for the red line to turn blue to generate the confirmed buy signal.

That occurrence should reverse any downwards movement that has occurred recently, but until it occurs we are still within the buy alert period and not in the aggressive buying mode.Will this occur soon or take some time more to occur? We have to watch and monitor it closely to know.

By moving from the daily chart to the weekly chart, we can therefore remove a lot of noise and get to understand the technical movements of the stock just a little bit more, like in this case.

Hope this chart is helpful to some.