Finding the Right Time for Charts

GBS explores questions about the best time frame to view charts -- and the best time to rise, shine and start trading.
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I just looked at my calendar and noticed it's about 60 days since we left Connecticut and set roots down in the D.C. area. You didn't ask (but then you never do!), but here are some initial impressions of where we are now vs. our former home in the Nutmeg state.

  • People: Friendlier here by a mile. Or maybe I just live near a bunch of politicians.
  • Newspapers: Have to admit, I miss The New York Times. But The Washington Post is mucho more gossipy!
  • Climate: I played 18 holes here in February. 'Nuf said.
  • Driving: The rallying cry is "Avoid the Beltway!" Replacing, of course, "Avoid I-95!"
  • Restaurants: I'm a simple guy. Just let me have Pizza Hut delivery and I'm happy. Bethesda has it. Wilton didn't. Next!
  • Swim Teams: Wilton Wahoos are top-notch and can boast a likely 2000 Games Olympian. Curl-Burke, yikes! Looks like they might send as many as six kids to the Olympics.
  • Schools: A tie. (It should be noted that for what they get in property taxes in both Connecticut and here, my kids should be getting a diploma from Harvard!)

So, I have to say, I'm loving it here in Maryland. Nice folks, nice climate and all the Meat-Lovers Pizza I can stand!

All this information get your juices going? Well, folks, valuable stuff like this is here every single weekend! I know, you just can't believe what you've stumbled upon. Of course, I'm welcome to suggestions on my next topic, so get those emails sent to

technicalforum@thestreet.com. (Next week's topic: Riding the Metro for fun and profit!)

EMC's Double Dip

Hello, I am just learning to work more with charts. I am looking at EMC's (EMC) chart, and the stock appears to be getting a larger increase in volume and spiking up in price. It has a double dip in its chart from last fall, and the stock took off thanks, I'm sure, to the Fed. The same thing appears to be setting up in its chart in March. Am I seeing this right or am I missing something? -- Joe Brightwell

Taking on @Home

Gary, Enjoy your work. What's your take on @Home (ATHM) - Get Report? It broke out on big volume Friday. The chart looks identical to RealNetworks (RNWK) - Get Report, which you discussed in your recent piece. ATHM to 180? -- Jonathan Luu

KRI Resistance

Hi Gary, As a longtime reader, I look forward to your columns. Please take a look at the chart for Knight-Ridder (KRI) . Looks to me like a clean breakout on good volume from recent tight congestion, but I'm concerned about resistance at the January high. I know you no longer require a 52-week high to qualify as a GBS long candidate, but what about this kind of situation? Thanks for your insight. -- Jim Wentink

Trapped in Freddie Mac

Gary, I am long Freddie Mac (FRE) . The stock seems trapped in a trading range. Could you tell me your technical opinion on the stock? I would like to know if I should add to my position or wait. Thanks. -- John Martin

Goin' Fishing

Hi Gary, Please look at Apco (APCO) . After a breakout above 10, it went to 12 and has since come down to around 8 3/4. Only positive news from this company, but it doesn't help the stock. Where do you think the bottom is, if I want to bottom fish? Thanks for your help. -- Ron Dombcik

Taking the Long View

Gary, I have been trading Genesis Microchip (GNSS) in its recent series of lower highs and higher lows. I am looking to take a longer-term position in this stock, but would like some advice. Do you have any insight, given the chart pattern, as to whether a breakout to the upside is a good possibility, and what would be a good price to get in? -- Sean Kennedy

News on Bel Fuse

Gary, I have been accumulating Bel Fuse (BELFA) - Get Report as a play on the xDSL sector for the last couple of months. All its numbers point to a great growth opportunity, but its stock has taken a severe beating as of late. I am somewhat confused by this action as it comes without any bad news. In reviewing the chart, is there something you see that might help explain this precipitous downfall? Furthermore, are there additional considerations to give when examining the chart of a micro-cap stock that you ordinarily do not on larger issues? Thanks. -- Ted Thomas

Wake-Up Call

Hi Gary, Quick question: Do you think there is a better time during the day to do trading? Is when the market just opens a better time, or later in the day when you can get a better feel for where things are going? Of course, things could have gone too far too fast by that time to get in on the action. Being that I live in the Seattle area, having to get up at 6:15 a.m. to trade when you're not a morning person is rough on the body. Thanks a bunch. -- Roberta Wennik

Roberta,

I guess my answer depends on the type of trading you're doing. If you're day trading, you can make good money by concentrating solely on the first and last hours of the trading day.

If you're position-trading, I'm not sure it really matters, although liquidity is best in the morning and late afternoon. Personally, I prefer to get all my trading done at the opening bell, as it gives me a consistent benchmark to measure against. Others prefer waiting for the reason you mention, and I can certainly understand that. I suppose it boils down to personal preference and what your trading model says. I've tried different times of the day, hoping to gain an edge, but have never come up with anything substantial.

As for your 6:15 a.m. wake-up call, just don't raise any swimmers!

Time Frames

Hello Gary, I'm a sportscaster who travels a lot during baseball season. That means I have plenty of time to study charts. When you are checking the history of a company, do you look at weekly, monthly and yearly charts? If you had to get by on one chart, which would it be? And are those "stocks on the move" charts in

IBD

good enough to make a decision based on what they show? Thanks, and what do your charts say about the Tampa Bay Devil Rays' chances this year? -- Paul Olden

Paul,

Good question, and it really depends on your time frame. If you're a day trader, for example, you always want to look at maybe one-minute or five-minute charts. But, in addition, a trader should always look at the next higher time frame. In the case of day traders, then, that would be daily charts.

Likewise, as a position trader, I look at daily charts and then the next higher time frame, weekly charts.

On which chart to take to a desert island, I'd always default to the time frame I'm trading in, and for me that would be daily charts.

Regarding the

IBD

charts, those are normally weekly charts, so if you trade with a longer horizon than I do, they're fine.

Finally, my crystal ball sees Tampa Bay winning the

Series

this year (assuming the entire

Yankees

roster is injured ... simultaneously!)

Gary B. Smith is a freelance writer who trades for his own account from his Maryland home using technical analysis. At time of publication he had no positions in the stocks mentioned, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Smith also writes Technician's Take, which appears every Monday, and Charted Territory, which runs Wednesdays.