How I Analyze Thousands of Charts A Week

I've been doing this for about a decade now, and I have yet to discover a better way to get a feel for the market than by cranking through individual stock charts. Yes, I still use intermarket analysis, breadth analysis, sector rotation, etc., but for those to be most effective, I need the context and nuance of individual charts. Most of us have lives outside the market, so it's critical to have a clean chart layout to quickly decipher a stock.

I like to buy leadership with bullish momentum and favorable risk/reward, and I've distilled this process down to three data points: Price, Momentum, and Relative Strength. I keep it simple. I learned early in my investing journey that if you put enough indicators on a chart, one is bound to agree with the bias you want it to fulfill.

1.) Price - It’s what pays. (Middle Panel)

Price is king. It’s the only thing that I can actually buy and sell, so I like to keep that the main focus on my charts. If I cannot identify the trend with price alone, I simply move on. In this game, it pays to be picky.

2.) Relative Strength Index (RSI) - Momentum Indicator (Top Panel)

Relative Strength Index (RSI) - It’s the momentum indicator I’ve studied the most and feel comfortable using. There is no magic momentum indicator; just study a few in-depth and use the one that makes the most sense to you. I mainly use RSI for identifying ranges. TL;DR: Staying above 50 indicates the bulls are in control of momentum, while staying below 50 indicates the bears are in control.

3.) Relative Strength - Stock vs. Benchmark (Bottom Panel)

Relative Strength is a critical component in identifying leadership, and buying leadership has a proven track record of success. It seems logical that it would be pretty difficult to outperform the market if you don’t buy stocks that are outperforming the market.

Example Chart - $CAMT - Camtek Ltd.

$CAMT - Camtek is a name I’ve shared a lot on Twitter, and you can quickly see why. It has a nice, easy-to-identify uptrend, RSI remaining in the bullish range (above 50), and solid outperformance (relative strength) versus the benchmark since the beginning of 2024. The last step is then identifying a risk/reward that is favorable to your process and timeframe.

Don't overcomplicate it. With these three data points, you can make informed decisions and start to make sense of the hostility the market presents. Cheers!

My Simple Chart Settings

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