Attention: TRADERS,

SCALPERS,
INVESTORS

Keep Investing in
Dope Stocks
K.i.D.S. - a Trader gang reference

YTD DAILY
YEAR-TO-DATE

What is technical analysis?

Technical analysis is a method of forecasting the future movement of share prices by
studying past market activity like prices and volumes, using charts and other
financial tools.
There are several benefits of using technical analysis:
Focuses on price movement, so the necessary data is easily available
Trends and patterns are easily identifiable
The Relative Strength Index (RSI)
The Moving Average Convergence Divergence (MACD)
The Stochastic Oscillator
Darvas Box Theory

What is the Relative Strength Index (RSI)?

The RSI is an oscillator indicator. Welles Wilder created the RSI in 1978, to measure
relative changes that occur between the closing prices of stock over a period of
time.
This information can be used to determine overbought and oversold conditions,
which help traders determine when to enter and exit the market. It is usually
displayed below the chart indicating the price movement of a stock.
The RSI will always move between 0 and 100. As suggested by Wilder, a value
above 70 is in the overbought zone, while a value below 30 is in the oversold
zone.
Calculating the RSI is a two-step process. First, the average gains and losses are
identified for a specific time period, say, fourteen days. The absolute gains are
added up and divided by fourteen. Similarly, the absolute losses are added up and
divided by fourteen. The ratio of average gains to average losses is known as the
relative strength.
To further calculate the RSI, the following formula is used:
RSI = 100 - 100 1+RS
The RSI is presented on an individual chart, or below the price graph. The indicator has an upper line at

Interpretation of RSI
Wilder posited that when the price of stock rallies rapidly, it will be considered
overbought at some point. Similarly, if the price falls continuously, the stock is
oversold
Technical Analysis
In both cases, Wilder theorized that a reversal is imminent. Therefore, the RSI
indicates an upcoming reversal of trend, whether it is downwards or upwards. Traders
should also watch the volume indicator to understand if interest in the scrip is
waning, and whether other traders are starting to book profits, or accumulate more
shares.
The RSI gives three types of trading signals divergence, charting signals and
the level of the RSI, in order of importance.
1. Bullish divergences: which give buy signals, occur when the price falls to a new
low, but the RSI makes a shallower bottom in comparison to the previous. It is
advisable as soon as the RSI turns upwards from its second trough. A bearish
divergence is a sell signal. It occurs when the price of a share rallies to a new peak,
but makes a lower top than the previous rally.

2. When the RSI breaks its downtrend line, a trader should place an order to
buy above the price trend line. When it overcomes a steady uptrend line, a
trader should place an order to sell short below the price trend line.
3. When the RSI crosses the oversold line of 30, one can interpret it as a buy
signal. When the oscillator crosses the overbought line of 70, it is a good
time to sell.

What is MACD?
MACD is Technical Analysis indicator that was developed by Gerald Appel in 1970 to spot
changes in stock movement and the underlying trend. It is a collection of three signals that are
calculated from the historical prices of the stock namely the MACD line, the Signal Line and
the Divergence.
It is broadly a momentum indicator that shows the relationship between two moving averages
of price i.e MACD is calculated taking into account the difference between a short term
Exponential Moving Average (12 days) of a stock and longer term Exponential Moving Average
(26 days) of the stock against the Signal Line which shows the 9 day Exponential Moving
Average.
How is MACD calculated?
An MACD chart consists of a two coloured lines the MACD line and the MACD Signal line. The
MACD line is calculated by by following this process 1. Calculate a 12 day EMA of closing prices
2. Calculate a 26 day EMA of closing prices
3. Subtract the longer EMA in (2) from the shorter EMA in (1)
The the MACD Signal line is calculated by taking the 9 day exponential moving average of the
stock.

A TRADER GANG PHILOSOPHY

Understand the
system before
investing into
anything. Start with
dinosaurs and
perhaps include
Trilobites. Now, drill
down to Gigabytes &
Terabytes.
We're the aliens...

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When the MACD line i.e Red Line falls below the Signal Line, it indicates a bearish signal
and is taken as an indication to Sell.
When the MACD line goes above the Signal line, it indicates a bullish signal and is an
indicator to Buy. The crossovers between the lines point to a divergence that would
eventually converge helping the trader predict the direction of the price movement.

"When there were

constant losses an
occasional small gain
would give me hope, like
the carrot before the
donkeys nose.

Read about the Box Theory here!

<http://vantagepointtrading.com/wpcontent/uploads/2010/05/How-I-Made-2000000in-the-Stock-Market.pdf>

Wall
St.
Tips

This is how I applied my theory: When the boxes of a stock in which I was interested stood
like a pyramid, on top of each other, and my stock was in the highest box, I started to
watch it. It could bounce between the top and bottom of the box and I was perfectly
satisfied. Once I had decided on the dimensions of the box, the stock could do what ever it
liked but only within that frame. In fact if it did not bounce up and down I was
worried, no bouncing, no movement meant it was not a lively stock.

DARVAS
BOX

Use of Fibonacci #'s in Technical Analysis

Fibonacci numbers are commonly used in Technical Analysis with or without a knowledge
of Elliot wave analysis to determine potential support, resistance, and price objectives.
38.2% retracements usually imply that the prior trend will continue, 61.8% retracements
imply a new trend is establishing itself. A 50% retracement implies indecision. 38.2%
retracements are considered nautral retracements in a healthy trend.
ABC's
Price objectives for a natural retracement (38.2%) can be determined by adding (or
subtracting in a downtrend) the magnitude of the previous trend to the 38.2%
retracement. After the 38.2% retracement the stock should break through the previous
swing point(B) on heavier volume. If the volume isn't there the magnitude of the move will
usually be diminished, especially on very low volume.
A-B =C-D when B-C =38.2% of A-B
61.8% retracements are warning signs of a
potential trend changes
Fibonacci analysis evaluates the short term (30 days)
intermediate term (60 days) and long term trends (120 days)
and retracements. Stocks that retrace 38.2% or less of a trend
will usually continue the trend. Retracements exceeding 61.8%
indicate a reversal. Alerts will include ABC's up/down (multiple
38% retracements) and various reversal signals

TRADER
GANG SIGNS

Stay Tuned for Real-Time Alerts and Profitable Charts!

KUTV - jumped 60% on Friday after my morning alert as it broke
through previous resistance.
RWLK - jumped 25% on Friday and I was able to scalp 14% in under
an hour!
MicroCaps, SmallCaps, Mid-Caps, LargeCaps, BlueChips

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