STRATEGY DEVELOPMENT TUTORIAL
The Teknalysis Strategy
Development steps are as follows:
- Screen relevant stocks and indices
The first stage is to decide the allocation of investment funds along the
following: Large, Small , or Mid Cap, Industry specific, country specific.
For instance large caps could be selected from Dow Jones 30, S&P 500,
Russell 1000, NASDAQ 100, S&P 500 (See Market Indices Level 1
(those underlined) are specific Teknalysis indices.) Large Cap
Selections are in Level 1.
Another expample might be second tier selections among the S&P 400 MIDCAP, and Russell
2000 SMALL CAP. They are part of Teknalysis index, Level 1
.
Industry specific allocations could be easily determined by reviewing industry
buy and sell correlation in the Teknalysis Level 2 indices - STRATEGIC
ALLOCATIONS, ETF Sector series, Level 1 Indices, and ULTRA SECTOR PROFUNDS
Country specific allocation can be directed by viewing Teknalysis Level 2 - MSCI ishares Worldwide.
Defensive posture - using equities to take advantage of stock market
downtrends by buying Fixed Treasury iShares and Rydex mutual funds that sell
short (see Level 2 - Strategic), ETF Trades- LONG and ETF Trades- SHORT
- Select and Vet
Once a stock becomes a prospect for purchase or sale it should be reviewed in
the Yahoo Lookup to verify the companies business profile, status, its
relative industry strength and names of the majority shareholders.
In addition the following can be applied:
IBD - CANSLIM criteria
S&P rating
Value Line rating (Be very leery of stock brokerage recommendations.)
For mutual funds past performance - See IBD (Investment Business Daily)
Mutual fund ratings A to E based on a 3 year record and the current year to
date, monthly and quarterly numerical percentages.
- Time purchases and sales
A stock with a solid business plan is affected by the following:
Insider buying and selling
Corporate stock purchases for treasury stock, 401K plan and other
retirement plans.
Merger and acquisitions
a) acquiring firm stock usually falls.
b) Firm stock being bought out usually rises.
Institutional buying and selling bank trusts - Mutual funds
Relative industry strength.
The collective results of the above are factored in the stock charts of
Teknalysis - The law of supply and demand of any stock determine its
direction.
- Utilize Teknalysis
The stock indices of Level 1 and Level 2 are labeled -
Sell/Watch; Buy Alert; Buy/Hold; and Sell/Alert. For maximum results while
minimizing downside risks, one should generally buy only when the stock is
oversold and sell only when the stock is overbought. The stock symbol is
moved from column to column as follows:
BUY ALERT - Stock symbol in black print is temporarily placed herein from the
Sell/Watch column. When it meets most buy indicators a new buy addition
to the index will be added in blue print. Once subsequently verified
stocks are moved in green print to the bottom of the Buy/Hold column for the
one day only. If the stock is not subsequently verified as Buy/Hold its
symbol is returned in red print for one day only to the top of the Sell/Watch
column.
BUY/HOLD - Stock symbols in this column come from the Buy/Alert column and
placed at the bottom or from the unverified Sell/Alert column placed at the
top. The new entries to this column at the top or at the bottom are
initially in green color.
SELL/ALERT - Those stock symbols in the Buy/Hold category that meet most sell
indicators are moved in black print to the Sell/Alert column. New sell
additions to this index are added in blue print to this column. A
subsequently verified sell symbol is moved temporarily in red print to the
bottom of the Sell/Watch column. A subsequent unverified sell symbol is
moved in green print temporarily to the top of the Buy/Hold column.
SELL/WATCH - Those symbols of the recently verified are held in this column
for close monitoring as potential buy alerts. On a recent basis, those new
sells are added at the bottom in red and those unverified buy alerts are
returned in red print at the top.
- See also
Timing Factors
Tutorial on Level 1 - Advisory Information
Tutorial on Level 2 - Action Portfolios &
Strategic Allocations
Watching requires
patience and no financial outlay.
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