Technical Strategy
Research
Technical Strategy
Research
Newton's Upticks
Introduction
History shows Sir Isaac Newton not only to have
excelled as a Mathematician and physicist, but also to be a skilled astronomer, alchemist,
theologian, and author.
Many who have studied Newton’s history know
that he published a book called “Opticks” back in 1704, expounding his corpuscular theory of
light. He considered light to be made up of extremely subtle corpuscles, that ordinary matter
was made of grosser corpuscles and speculated that through a kind of alchemical
transmutation. As he puts it, "Are not gross Bodies and Light convertible into one another ...
and may not Bodies receive much of their Activity from the Particles of Light which enter their
Composition?"
Newton also constructed a primitive form of
a frictional electrostatic generator using a glass globe. He was the first to show a diagram
using a prism as a beam expander, and also the use of multiple-prism arrays.
Fast forward to October 2022, in homage
to the great Isaac Newton, I am now unveiling my first technical Stock list, which on a
subtle play on Newton’s Opticks, will be called “Upticks.” This will be an
intermediate-term technically derived stock list of some of my favorite liquid names
within various sectors of the S&P 500 which I feel might offer attractive risk/reward
opportunities at this stage of the market.
These ideas are largely based on
stocks at/near 52-week highs that are showing excellent technical structure and
little evidence of technical deterioration. However, in some cases, I will elect
to buy stocks that are extreme laggards, if my work shows that they’re primed to
begin moving sharply off the lows following initial consolidation. Note, stocks of
this sort are far more likely to be tactical longs than buy-and-hold positions.
However, largely, this list comprises my thinking of the best stocks within most
sectors of the S&P 500.
The duration for these
selections will largely be 4-6 weeks and hopefully longer. I have included
technical resistance as well as Support for those who wish to utilize these.
Stocks that move under Support before resistance range is met will be removed
from my list and not addressed in future emails. Furthermore, upside resistance
is a guideline only, and 100% technically derived and not related to
fundamentals of the underlying issuer. Occasionally upside resistance ranges
might prove temporary only and i shall adjust if/when these resistance zone is
reached if i feel that further technical upside is possible. It's up to each
investor to utilize their own risk management and adhere to their own investment
timeframe given their own time horizon and risk tolerance.
Methodology
- Relative strength vs sector and index
- At/near 26-week and/or 52-week highs
- Positive momentum and/or Upward sloping moving averages on multiple timeframes
- Lack of DeMark exhaustion on daily, weekly, monthly and/or in combination based on TD Sequential and/or TD Combo indicators
- DeMark “TD 13 countdown Buys” utilizing TD Sequential and/or TD Combo indicators at/near lows on multiple timeframes
- Elliott-wave theory
- Lack of deterioration within its sector and at/near upper quartile of its annual range
- Above-average bullish bases for lengthy timeframes which might precede technical breakouts
- Short-term downtrends within existing intermediate-term uptrends which provide attractive risk/reward opportunities
- Leading stocks within sectors poised to benefit from cyclical upturns
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