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Kevin Tuttle's Main Points



Kevin Tuttle
Using 'Road Signs' to Simplify the Complex

  • Facing the Facts...
    • The Last Bull Run, from 1992-2000, during which the Dow increased over 1000% meant easy money for everyone employing the "buy and hold" theory
    • Times have changed - Going forward, a "good" money manager needs to become "great" in order to survive
    • What worked in the past will not work today
    • To survive, you must:
      • Design a proven trading model that stands you apart from others
      • Maintain a consistent strategy for your model
      • Have a solid foundation behind the strategy
  • My System (It isn't for everyone - you need to find what works for you)
      • Every long term uptrend is followed by a long term downtrend
      • Consolidation periods are 13-19 years
      • P/E multiple trends have a direct correlation to every market trend and consolidation
      • Breakouts from consolidations have not begun without first having the P/C multiple drop below the "undervalued" level
    • Strategy for my model: Simplicity!
      • Every day, there is tons of information to assimilate, and this information can be a double edged sword
      • This overload of information can cause you to over-think the trade and second guess yourself (become a "Trader in headlights")
    • Approach to the strategy
      • To determine, with reasonable probability, where and when tops and bottoms may occur within long term consolidation periods by using simple trend-line technical analysis and the corresponding 'Road Signs,' changing the portfolio accordingly
      • Admit when you are wrong without qualms or ego, and regroup
    • Too simple? How many times during the 2002-2003 downturn did you get disappointed when going net long? How many times after the markets hit bottom in March, 2003, did you stay net short?
      • Technical analysis should be one of your trading metrics used to evaluate risk/reward dynamics, and can heighten the probability of success
      • In this dynamic trading model, I consider myself a quantitative, top-down, dynamic swing or trend trader, not a day-trader
      • I focus on simple trend line analysis merged with chart patterns, volume, momentum, divergence, and contrarian theory so as not to over-complicate or over-think the trade
  • My Trading Process
    • Step 1: Dynamic quantitative analysis, both fundamental and technical, changing my screens to accommodate the markets' direction
      a. I scan about 300-400 stocks technically before the open
      b. I do a second scan intra-day (about 10:30) which you see as "Hoofy & Boo's Biggest Movers!!!"
    • Step 2: Technically scan for 'Road Signs,' such as trends, technical formations, momentum divergence, volume, and group movements
    • Step 3: Update watch list and check industry groups
    • Step 4: Execute with an exact entry and exit point (No emotion, keep it simple)
    • Step 5: Profit
  • In closing, become unique in developing your own trading style that is based on a tested strategy and supported with a strong foundation. In this way, you will be able to separate yourself from the masses.
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No positions in stocks mentioned.

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