Stock Charts: One tool of many

Reading stock charts is an art in of itself . Im attaching a bad chart and a good chart so you can see the difference. I generally go out 9 months on a chart so I can get a proper reading on volume consistency and spikes usually caused by news or promotion. I also look at whether the stock has been over bought or oversold at those times. I pick 3 similar lows to get my bottom and pick 3  similar highs to get my approximate top. I also look at the top and bottom bollinger bands to see if an up trend or down trend is possible. A trend up on the top band generally indicates an upturn while a push downward on both tends to indicate a downward trend. Flat top and bottom bands indicate a squeeze and generally the stock will trade flat without any type of push or news. Ive seen so many charts that now I really can look at a chart with little analysis without really putting alot of thought into it. This has come from alot of practice and exposure to many charts. Hardcore technical analysts tend to agree and disagree with one another as opinions are like butts everybody has one. You have to find your niche and stick to it. Reading stock charts is only 1 tool of many that I use in analyzing a stock and nothing is written in stone. One constant I believe in is the 50 day moving average. I have found that If i can get in on a low and play the stock to around that average I make more money than if I dont use that average. Unless of course you are playing bio-pharmaceutical stocks. Those things tend to have a mind of their own and are driven so much on speculation of  results of testing and in my opinion you have to be nuts and pretty darned lucky to catch one of those. The more due diligence you do on those stocks the better reading you can get and then make your decisions based on that. Tomorrow Ill wrap up the work week with a quick check I do on a stock on the fly in the heat of a trading day.

Bad chart

Good chart