Timeframes Matter...

Charts Can Be Deceiving

I hope to get you to pay attention to other TIME FRAMES along with the one being presented.  You should look at the daily, weekly, and monthly charts before making an investment in any stock.  Then follow the trend.  Until it breaks.

 

 

 

I know, I know.  You are thinking that a chart is based on facts so there is no way it can lie.  Well, I don't agree.  What if the TIME FRAME used to create the chart doesn't give you enough of the history to really see the details?

I am about to show you a daily chart of JCP.  This daily chart looks like things are getting better for JCP's stock.  Maybe they are.  The daily candles have already crossed over a down trend (DT) line and are heading for DT 2.  They are actually following an up trend (UT) line very nicely. 

Let me just say that there are some reasons to "believe" that JCP's stock has made a turn for the better.  But I don't invest on what I believe.  I invest (trade) on what I see on the chart.  But which chart am I looking at?

Remember that the DT lines on the chart are places we should look for a potential change in direction.  Sooooo, be on the lookout.  Follow the up trend line until it breaks.  The one I am currently following is the green UT line.  And it's working.

 

This is a Daily chart of JCP

Now look at the weekly chart of JCP.  A larger picture of the stock's history tells a different story.  The weekly chart tells me that JCP is just going lower and lower.  It doesn't look like a turn around at all.  For me, I would not be willing to say that JCP is trying to turn around until the stock closes above DT 2.  When JCP closes above DT1, it will be safe to tell your friends & family to consider buying the stock in their retirement plans.  Right now though, DT 1 is a long way off.  So let's keep this between us active investors for now. 

Will there be opportunities to make money along the way?  Oh yes!  How about if the stock just follows DT 2 lower?  Sure, we all know there is a way to profit from a move lower.  Remember to trade what you see.  Not what you think, or feel, or hope, or ...

This is a Weekly chart of JCP

 

Do you see how some investors can be bullish while others are bearish?  It may be as simple as which TIME FRAME they are using to form their opinion. If I was recommending an investment to you and I only showed you the daily chart you might agree JCP looks bullish.  Looking at the weekly chart should damper your enthusiasm a bit. 

 

As I said earlier, I hope to get you to pay attention to other TIME FRAMES along with the one being presented.  You should look at the daily, weekly, and monthly charts before making an investment in any stock.  Then follow the trend.  Until it breaks.