There's nothing more I like doing on a Sunday morning than breaking out my $4,000 Alienware computer and running a few charts over a couple of my favourite ASX shares, like Commonwealth Bank of Australia (ASX: CBA).
And let me tell you this. After dusting down my third computer monitor (UHD, of course) I nearly choked on the cheesy French croissant that I had melting between my teeth.
As any seasoned trader will tell you, it's not every day you get this type of confirmation in the charts.
Just take a look for yourself:
CBA share price
I'm sure you don't need me to explain that Bollinger band. It was just. Incredible.
As you can imagine, I could barely contain myself.
Similar to the way it did when I was a 13-year-old choir boy my voice faintly inflected with excitement when I called over my fiance.
"Oh heavens! Quickly, come check out this CBAaaay price chart," I croaked.
My fiance knew it was serious. She hadn't heard that inflexion for years.
She stopped feeding the baby and rushed over. Quick smart.
Although she was taken back she leant forward for a closer look at the CBA price chart.
She's my rock, you see.
And she likes to make sure I don't miss the little things, like any gap downs or double-island reversals. It's especially important for me to share the financial decisions with her because we trade with a margin loan.
Of course, the margin loan is secured against the family home, so the way we see it there's virtually no risk.
Our bank gives us a great discount on the margin loan because we use them for our interest-only mortgage. Plus, our two 12-month-old credit cards offered three months interest-free.
It's a no-brainer.
Anyway, it wasn't until my fiance directed my attention to the following chart that our hearts really got racing.
Could it be?
It was pure bliss.
The signal was confirmed by the SMA — and we didn't even need to look at trade volume! That was, until…
We realised trading shares based on chart signals or technical analysis does not work. Furthermore, it was a Sunday and markets were not open.
Foolish Takeaway
Before you consider 'trading' shares using a chart or some other type of technical analysis, please read this study in its entirety. If you don't have the time, here's the meat and potatoes of what the researchers from New Zealand's Massey University found:
"While we cannot rule out the possibility that technical analysis compliments other market timing techniques or that trading rules we do not test are profitable, we do show that over 5,000 trading rules do not add value beyond what may be expected by chance when used in isolation."
Earlier today I revealed another study which found that timing the market (in the various guises of fundamental investing or technical analysis) may account for less than 10% of a portfolio's returns.
If you are looking for a far better way to make a life-changing return with a small amount of money, try this simple strategy.
