Two Applications of Historical Market Patterns

The historical patterns I identify on this blog are only the starting point in configuring a worthy investment or trading strategy. If you're investing, it's important to select promising stocks and sectors through solid fundamental research. If you're trading, the historical patterns must be accompanied by proper money management and exit strategies. Those can then be objectively tested as trading strategies.

Here are two very recent examples of extensions of historical patterns:

1) Yaser Anwar's recent blog post summarizes the fundamentals for AIG and sees a favorable outlook. By adding a "technical" component to the fundamental analysis--an identification of recent trading patterns in AIG stock--the investor can address the question of whether to wait to get better prices after a three-week runup in the stock.

2) The Dogwood Report drew upon the two-day trading pattern recently mentioned on this site and conducted a test of a related trading strategy. The long-only strategy handily outperformed buy-and-hold, especially in QQQQ over the timeframe tested, which included a major bear market.

I strongly suspect that integrating historical patterns with sound technical trading strategies would yield fruitful results. If there is a technical trader out there who is also writing a blog and would like to collaborate on a post, drop me a line. I welcome the opportunity to explore synergies among different trading approaches.

Thursday's Blog Links and Market Strategy and Stats From Dr. Brett