Stalwart technical analysis experts recently shared their top investment mantra for entry and exit in to the stock market, which can serve as a guide for investors. At the CMT Association event held in Mumbai, Martin Pring, founder of Pring Research, shared the importance of tracking the technical indicators, along with economic indicators. “I look at the technical indicators, and see if they conform with the economic indicators. They work as a team. You want both to be moving in the same direction. If the economy is bottoming out, you would like to see the same thing in the long-term momentum indicator in the stock market,” Pring said in his talk at the CMT Association event. Notably, Martin Pring is the author of widely-read titles such as ‘Technical Analysis Explained’, ‘Introduction to Technical Analysis’, ‘Martin Pring on Price Patterns’, and other books of immense value to technical analysts.
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Atul Suri of Marathon Trends shared very interesting stock market anecdotes, and explained how technical analysis is an important risk management tool. According to the expert, technical analysis can provide clarity to the investors, especially while exiting a stock. “While exiting a stock, fundamental analysis can lead to ambiguity. You need clarity– and technical analysis provides just that. For example, the stock is either above the 200 DMA or below it. There’s no maybe. If a breakout has happened, it has happened,” Atul Suri, CEO of Marathon Trends said at the event. Mayuresh Joshi, Head of Equity Research-India at William O’Niel noted the importance of booking profits when the stock has run up significantly. “It’s important to understand that the leaders of the previous bull run, have not been the leaders of the next bull run,” he said, adding that investors should look to book profits after a 25% rise in share price. Further, investors should exit the stock in case they have lost 8% of their capital in the stock.
A panel of experts including Shrikesh Pabari, CMT, Head of Trading at Credit Suisse, JC Parets, CMT, Chief Market Strategist at All Star Charts, Shiv Sehgal, Deputy CEO, Capital Markets at Edelweiss Financial Services shared various technical analysis tools. CANSLIM– a system for selecting stocks, created by Investor’s Business Daily founder William J. O’Neil also formed a major part of discussion during the day. CANSLIM approach is intended to help investors identify growth stocks using a combination of both fundamental and technical analysis techniques. CANSLIM is an acronym which stands for Current Quarterly Earnings, Annual Earnings Increases, New Products, Supply and Demand, Leaders vs Laggards, Institutional Sponsorship and Market averages. This approach was discussed at length, and can be a very useful tool for retail investors.
Ralph Acampora, CMT, Chief Market Strategist at Altaria Capital discussed the evolution of technical analysis, the critical role it plays in investment decisions, and the powerful discipline it has grown into around the world. Notably, Ralph Acampora has worked at Wall Street for around 50 years and is considered the “godfather” of technical analysis of financial markets.