How Jim Goodman Employs his "PSYCLE" Trading Concept Technically
1) after visually examining 2,000 individual stock charts weekly,
I separate them into probable bullish and bearish patterns, (depressed bases long, and extended
umbrella tops short) culling the most tradable (best looking possibilities), based upon best patterns viewed....
2) I then note if any Industry Groups are specially represented by these "best individual issues", and derive an "overall/market" picture,
if any....do these groups in their current configuration, tell us any further, larger, historical PSYCLICAL message, as well ?
3) after examining price/volume patterns in the specific issues chosen, I add any psychological, media, counter-fundamental, and sentiment
nuances and patterns, which I have learned to recognize over the decades, from a PSYCLE point of view....once I get a smaller "best" longs/shorts list,
I add any experiential and/or historical PSYCLE input/feelings of my own.
4) In Pension/Retirement accounts, I accumulate depressed issues with the best Ratios of upside potential vs. downside risk (minimum 4 to 1) for cash. On margin, if possible, in "growth" accounts, with Preset Upside Price targets, and mental stops below recent support....
5) In Option accounts, I always buy at least 4-8 months time, and
at least "near" or In-the-money Calls/Puts, ONLY (opposite the incorrect way that "the 95% who always lose do them). That way, even if I am incorrect short-term, initially, many times we will still have months still left, in which my ideas might generate gains as initally expected anyway....
6) ALL accounts will ALWAYS hold at least a few (several if larger) positions at all times, diversifying, lowering our risk further....
7) the PSYCLE tries to catch the Beginnings of rises/declines, BEFORE
others recognize opportunities....we are sometimes a bit early, but it is
much better to be early, if buying/shorting near their lows/highs already.
8) I never try for "home runs"....but lots of doubles, and a high batting average, few gross errors....average holding periods, very generally:
for depressed stocks for cash or on margin: 3-6 months
for Options: 2-4 months (surprise....lowers our risk further)
9) I generally take "overnite gift gains" quickly, avoiding all greed, emotions, etc., and try to cut losses by selling (long) after the normal bounce which occurs after breaks below support....
10) our issues will tend to "do their thing" Independently and often Regardless of any real or perceived "external" news, economic, political, weather, and foreign items which "the 95% masses" waste their energies chasing and worrying about, because ours are ALREADY near their lows or highs....I rarely view most followed "technical" indicators in the way others do, as they are often incorrectly interpreted anyway, and my approach takes much less time, and produces much better results over time, in toto.
11) computers/calculations/oscillators are not needed, nor are complicated theories,
and we also ignore 95% of the input which others misbelieve might/should affect future price movements....
we separate information which may just be "interesting to know", and concentrate only on things of "Directly
Usable Price Predictive Value" ("DUPPV")
....call me at (949) 786-2577 or "(949) STOCKS 7", or write: p.o.b. 17596, Irvine, Ca. 92713-7596