Fundamentally Technical !!!

Recently I came across an elderly trader in the terminal room of Consortium Securities at Shimla.

The gentleman with grey hair is widely respected in the city for his consistency in making money in stock trading.

I said hello to him, introduced my self and asked whether he traded on the basis of fundamentals or technicals.

I wish to share with you the interesting answer I got from him.

"I am Fundamentally Technical !", he said, and smiled!

I was surely amused.

But, like the sayings of sufi saints and fakirs, I knew that he had a strong hidden meaning in what he uttered.

"How, Sir?" I asked, leaning forward in my chair.

"Singh Saab! I don't do anything new.

All I do is keep on listening to what every expert on TV channels has to say.

Whether at home or here, I keep glued to the Business TV channels during market hours.

I listen to what everybody is saying!

After a while, I always figure out the sectors and stocks which are showing fundamental strength.

Out of these, I shortlist a few whose strength is not temporary and is likely to continue!

Similarly, I shortlist the sectors and stocks which are weak and their weakness is likely to continue!

Thereafter, all I do is this.

I keep shorting the fundamentally weak stocks on every overbought position on 1-month chart.

and keep taking long position in the fundamentally strong stocks on every oversold position on 1-month chart.

I use RSI, Willaim%R and MACD to pin point oversold and overbought conditions.

The opportunity to short weak stocks also arises typically when the market "gaps-up",

and so does the opportunity to long strong stocks when the market "gaps-down."

I always keep my list of stocks and sectors showing strength or weakness updated.

This way, I shortlist my target stocks on the basis of fundamentals discussed by experts on TV

and enter the trade on the basis of technical signals.

Since I am on the right side of both fundamentals as well as technicals, my trades rarely go bad."