Question about Steve Woods 2400% return

Just kidding Steve. While I am watching your recommendations we all know which stocks are going to explode when things really break loose. Even though I watched your picks today I always have brcd, extr, cien, ebay, qlgc and a few others on my screen. I hope I have as muck luck with float analysis as I have with momentum. Keep the tips coming! :cool:

~EC
 
Finished reading Steve's book. Said I would post a comment so here it is. I think there's some value here for longer term investors but little to help the short term trader. Most of the buy and sell setups seemed to me to be pretty obvious without the float analysis. Could possibly get you in a little earlier on a longer term trade.
 
Nico, I haven't read Steve's book yet. However by reviewing his article for TA of SC and by reading his website I came to the same conclusion:

Originally posted by Babak
I wrote to Steve and pointed out that all the examples that he provides in his article (TA of S&C 1996) would generate the same signal not based on his technique but simply because it presented a very clear channel breakout. Any student of TA would be able to see this and take either long or short positions. I then asked him what further value his system provides above and beyond (this seeming Donchian breakout system). His reply was for me to read his book.
More...

Unfortunately I have yet to engage Steve in a dialogue regarding how much value his analysis brings to the table. I can understand that as someone who has invested a lot of time and energy in researching something, it can be emotional when somone even hints at a criticism of your work, yet it is a valid point and one for which I have yet to receive an appropriate reply.

Basically the question is this, is there an incidence where Float Analysis would give a valid signal for a position, when at the same time basic technical analysis (support/resistance) would not?

A valid signal is defined as one which would result in a positive result long term-a profitable trade.
 
Hi Babak,

I find your question a bit frustrating and difficult to answer. Float Analysis revolves around three new indicators that are new tools that many technicians have added to their toolbox. Now a tool is just a tool. It may be better or worse than other tools but in certain specific circumstances it's great to have the right tool for the job.

Imagine this ficticious story. Picture a time when "basic technical analysis" (to use your phrase) did not have moving averages as a tool in its lexicon because nobody had yet thought of it. Now along comes some guy who says "Hey folks, I just thought up this cool idea called a moving average." Now imagine that all the technicians in the status quo used trend lines and so some guy who has used trend lines successfully all his life comes up with the question… "What good is this new tool called a moving average? Is there an incidence where moving averages would give a valid signal for a position, when at the same time basic technical analysis and trend lines would not?"

Answering the question would be difficult and frustrating.
Now what I've come up with, I believe at some point in the future will be as common place as moving averages. It is in fact closely related to moving averages because the indicators kind of do to volume what moving averages do to price. They up volume cumulatively until a bar in the past is reached in which the total number of shares traded equals the number of shares in the float. Time and Price dimensions resulting from this are called a float turnover and it is a proxy for a change in ownership.

Now with those comments as a back drop let me try to be more specific about instances in which float analysis would help you where traditional methods might fall short. The best place to observe this is in breakouts above bases of support. Float analysis gives technicians a new way to evaluate the strength of the base from which a price is rising away from. If you have two stocks that have similar price structures in their basing characteristics but one that has a float turnover that extends back to a much lower area their will be less power in the breakout because the ownership at the lower levels will sell into the breakout to take profits and the price will stall. But if the base of support of that other stock that looks exactly the same but has a single or a double turnover in the entire sideways move then the breakout and subsequent price rise will be much more powerful because there is not ownership at a lower level that will be a drag to the price rise.

For example, today at this very moment VSNX has just broken above its float turnover that is 10 days in length which means that in the recent sideways move it's cumulative volume equaled the number of shares in its float. Knowing this indicates that today's breakout will much more powerful than if its float turnover was say a six month distance on the chart because if this were the case then a lot of the ownership that was down around the $4 to $8 range would be selling into today's breakout. But that's not the case. The turnover range at today's breakout is close to the breakout point. This is telling me that the stock will go much.

Now for disclosure purposes. I sent an alert out to my newsletter subscribers concerning VSNX just prior to posting this message to you. And I have not bought any of it so as to avoid being accused by the SEC of attempting to manipulate its price.

In addition, I have just had its chart posted on the bottom of my home page so you can see what it looks like.

By the way, it's viewed best on a Microsoft brower. Also the whole website is being rebuilt and will be up in a week or so.

Best regards,

Steve Woods
 
Hi Nicodemus,

I must admit that your three sentence 'comment' of my book left me amazed for its brevity. If the readers of this thread use your comments alone I think it would leave a rather unbalanced view of the matter. Fortunately you aren't the only person who has read my book and commented on it. Here's a few unsolicited comments not including the endorsement statements by Martin Pring and Lawrence McMillan:

I have been in the financial industry since the late 70's as a broker, institutional analyst, money manager, and now as a private investor. In the past 20 plus years I have not been exposed to a more useful analysis of volume than you have presented. I am very impressed. Charlie Miner

Just finished reading your book, and I found the float analysis concepts absolutely astounding.
Carlos Gonzalez

"I am impressed by two things in your writings - first, the float analysis concept in general, and second, the position that you have taken to publicly declare this discovery and document it as your own. As the popularity of this cutting edge analysis grows, so will the fame of Mr. Steve Woods! Congratulations on such a remarkable discovery. Your years of research have paid off. Thanks for all your help and your remarkable insight!" Steve Berges

"Your float analysis idea is a true breakthrough! I can't tell you how much research your float concept has spawned with me. It's incredible and my understanding of the markets has expanded dramatically. I feel like I was a Newtonian physics expert all my career and a few months ago I bumped into someone (that being you) who gave me an idea to create a whole new type of physics called Quantum Mechanics! Thanks!" Chris Fuligni Hedgefund Portfolio Manager

"Float Analysis is a great new research area. For several years, I always thought that there was a missing dimension to trading stocks and wondered how certain stocks go up so fast compared with others. When trading IPOs, one always looks at the stock's float because if it's very small, then the price move can be explosive in some cases. The first thing I did was program all of the float indicators in TradeStation and even devised some of my own based on the ideas in the book. The whole idea of the float turning over at critical turning points turns out to be valid. As Steve Woods points out, float analysis in and of itself is not a solution, but if you pay attention to the trend of the float channels and have some kind of market analysis tool for short-term direction, then it is a gold mine." Mark Conway

"An altogether new insight into what moves the stock market. This is a remarkable book for a number of reasons. First, it lucidly presents an entirely innovative look at the meaning of price and volume relationships and how stock prices move in response to changeover in ownership of the "float." Second, it presents an entirely new and eminently useful set of technical indicators that effectively identify stocks that are poised to make significant price moves. Finally, the book is richly detailed with numerous charts that not only illustrate the principles presented but also validate the methodology proposed. I highly recommend this book. It will change your thinking forever about why stock prices change and what moves the market."
Warren Cohen

As an avid reader of financial publications and student of the financial markets, I read The Precision Profit Float Indicator by Steve Woods with great excitement and utter disbelief. Excitement that this new indicator may be the "missing link" for me being able to achieve an above average rate of return in trading the markets. And, disbelief in the fact that the basic concept is so simple and so common sense that it has been over-looked by all the brilliant financial minds for so many years. It appears that Mark Twain's statement that "the only thing not so common is common sense" is certainly valid. I am firmly convinced that financial market authors will soon place Mr. Woods' name along side those of Mr. Gann and Mr. Elliott for their respective unique discoveries. It is strongly suggested that prospective readers of The Precision Profit Float Indicator keep an open mind while reading this unique publication. Mr. Woods' fine work gives new meaning to the statement that "fact is sometimes stranger than fiction!"
Orville W. Freymuth

I find this book to be outstanding. It is a hard book to put down; you will want to read the whole book before you stop reading. You will want to buy an extra copy to give as a gift if you have a serious trading friend. This book is a classic and is a must read for anyone who wishes to study volume in regards to stock. The information given is unique. The book not only covers buy signals, but also covers sell signals. Woods reveals one of the best techniques I've ever seen for telling how to get out of volatile high momentum stocks on fast run ups. The book also gives very solid information on expected reversal, support and resistance levels. Ernest E. Helms

"Your indicator is a beautiful thing. An elegant concept. A little beauty. One of those `now why didn't I think of that' ideas." -Bruce Shand

Your float analysis concept is brilliant in its simplicity. Tim Young

This is a great book showing a new way of looking at volume analysis to identify trend reversal, breakout from tops and bottoms. Float analysis can be used as one of the volume tools in identifying stocks that are ready to make move. The author also has a great website www.FloatAnalysis.com with a copy of the original article on the subject published in "Technical Analysis of Stocks and Commodities" magazine. This is a must read book for any serious investor interested in Technical analysis. Viren Balsara, MD.
"Congratulations on a really, really impressive indicator" -Mark Reiners, Trader

"The really good ideas always seem so simple, don't they" -Dennis Scully

"I love these indicators!" -Joe Rogers

Your emphasis on float/volume/turnover is brilliant and is something which seems vastly overlooked by many investors. Jeffrey Stern

I always knew that the smart money (specialists, market makers, insiders etc.) accumulated stock at bottoms and distributed it at tops but just didn't know how to turn this general knowledge into something predictive of a stocks turning point. Your technique appears to be the answer to this problem, bravo for discovering it. - Ted Groce


"Re TARO: I happen to know personally the President of the Canadian operation and have followed this stock for a long time. We were amazed at your float analysis calling the top!" Ken G.

Loved your book. I want to congradulate you on it. I found it fascinating. Please add me to your newsletter subscribers. I do not have to tell you what an incredible realization you have going. It gives a leap of insite into that constant question of why the market does what it does. Thank you for your worthy contribution, to a field of endeavor we both love!. Yours truely; Jerry Woodall


I am a student-subscriber from Austria/Europe of your Free Newsletter since January 2001. Your
Track Record in the last 9 months is amazing and gave me the chance to finance the Fee for my university and also to understand the great discoveries from your work. I read your book in my summer holidays and I will tell you "THANK YOU" for your work in your book!!! M. Magguer
 
My main point was that it had little value for daytraders and that most of the buy and sell signals were obvious without float analysis. If you disagree with this please post a few charts with buy and sell signals that are not obvious with other forms of technical analysis.
 
Dear Nicodemus,

In your earlier comment you used the term 'short term' trader and in this most recent comment you referred to 'day traders'. Float Analysis can help most all market players but especially short term traders (days to weeks), intermediate term players (weeks to months) and long term investors (months to years). Day traders can benefit but not as much. It can help them in finding and correctly analyzing stocks that are about to break out and playing the breakouts.

For example, I bought INVN at $10 and change in a couple of private accounts I manage last Thursday. The reason I did so was because after going sideways in a multiple float turnover base of support formation, it started moving up on light volume. This was the clue that all the shares had become tightly held. Today it's trading about 40% higher.

Jessie Livermore talked about a "golden field" that exists where a stock is moving quickly from one trading range to another. And this applies here in the example of INVN.

You also might want to read the comment I made earlier today to Babak as there is I stock that I recommended in a stock alert just today VSNX. It could have been used by daytraders.

Best regards,

Steve Woods
FloatAnalysis.com
 
Steve, thank you for taking the time to explain your position. I was simply trying to see how float analysis adds to a trader's tool box.

Your analogy of the moving average is a good one. In fact the question that I had can be answered in the case of mov avg. For example, many times a stock will fall very rapidly (get dumped) and surprisingly halt its descent right around the 200 day mov avg.

Q:Is there an incidence where moving averages would give a valid signal for a position, when at the same time basic technical analysis and trend lines would not?

A:Yes

No previous technical analysis tool, trendlines, S/R lines, etc. would have provided that target. The moving average does.

I'll provide my own analogy. Lets say I'm a carpenter and I have a trusty hammer. Now a sales person comes to my door and offers me a new tool called the haamer (new design from Sweden). It look suspiciously similar to my hammer.

So I ask the sales person why I should buy it and they tell me that it is good to have many tools. I tell him, yes but only if they do different things. If my hammer and your haamer do the same thing, why do I need them both? Is there anything that the haamer does that my hammer can't do?

------------------------------------------------------
Re your recent long positions on INVN and VSNX: I abhor fundamental analysis because I am not a long term holder of securities. However your time frame is rather long, therefore I wanted to bring to your attention some rather intriguing rumblings out of www.insidetruth.com re both those stocks. http://www.insidetruth.com/reports/report_VSNX.htm

If you can't open the link go to the mainpage and click on Reports.

Taking a technical tack I would also be cautious as they both have rather long term resistance coming up ($17.5 for INVN and $17.30 for VSNX) Much too close to make a palatable win loss ratio for long positions. If they clear those long term levels they would be much more attractive longs.
 
For all wondering what Mr.woods record from 4/27 to aug.
it is a mediocre record. nothing spectacular. first of all no guide lines of how to trade. no clear definitions of short/medium term.
WASTE OF TIME. I assumed Shortterm as 4 weeks and medium term as 12 weeks. Recommendations are too random and this system is USELESS for short-term/day traders.

23 wrong and 13 right on paper. If you trade them you will LOOSE.
But that is my only opinion. Don't waste your time.
i already did.


Weekending Stock ShortTerm Intermediate Priceonrec. High Low Prediction
27-Apr CHIC Higher 34.12 39.54 10.5 WRONG/Intermediate
27-Apr COLM Higher 43.2 51 20.71 Right/Med
27-Apr PPDI Higer 29.78 38.26 19.4 Right/Med
4-May PCLN Higher 6.08 10.47 1.8 WRONG/Short-term
22-Jun ATVI Higher 33.95 40.5 41.15 WRONG/Short-term
22-Jun EPIQ Lower Lower 26.21 25.5 14.9 Right/Short-term
22-Jun PVA Higher Lower 32.7 26.75 WRONG/Short-term
29-Jun PENN Lower 18.32 27.88 WRONG/Short-term
29-Jun SFCC Higher 29.48 34.88 Right/Short-term
29-Jun TARO Lower 32.48 40.08 WRONG/Short-term
29-Jun ROOM Lower Sideways 46.5 52.98 WRONG/Short-term

6-Jul BASI Lower 9.97 14.37 WRONG/Short term
6-Jul SHFL Lower 18.93 16.03 Right/Short
13-Jul DRMD Higher Lower 16.93 22.93 RIGHT/Short, Wrong/Med.
13-Jul EXPE Higher Lower 42.05 51.05 RIGHT/Short, Wrong/Med.
13-Jul OPTN Lower Higher 15.46 21 WRONG/Short term
13-Jul TARO Higher Lower 39.6 48 Right/Short
20-Jul STRC Lower Higher 33.3 41.57 WRONG/Short term
20-Jul ATVI ?? ??
20-Jul ALLY Lower 16.35 16.47 Wrong/Short-term
27-Jul AMHC Higher Higher 37.97 28.08 Wrong/Short-term, Wrong/Med.
27-Jul KKD Lower Lower 32.46 27.49 Right/Short-term
27-Jul THQI Lower 54.01 45.03 Right/Short-term
3-Aug SLXP Higher Lower 19.92 12.42 Wrong/Short-term
3-Aug MEDC Lower 38.73 27.52 Right/Short-term
3-Aug VTSS Higher 22.32 12 Wrong/Short-term
10-Aug DKWD Lower Higher 42.2 46.32 Wrong/Short-term,Wrong/Med.
10-Aug ASCA Lower Lower 14.42 16.56 Wrong/Short-term, Right/Med.
10-Aug PRX Lower Lower 35.35 39.39 Wrong/Short-term, Wrong/Med.
17-Aug SCRI Lower 22.89 26.89 Wrong/Short-term
17-Aug ALLY Lower 16.29 20.29 9 Right
17-Aug EPIQ Lower 20.24 29 Wrong/Short-term
17-Aug AHMH
24-Aug DRMD Lower 22.75 17.33 Wrong/Med.
24-Aug UOPX Lower Higher 34.58 25.35 Right/Short-term
24-Aug STRA Lower Lower 52.9 38 Right/Short-term


24 Wrong/13 Right
 
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