My New Favourite Buy Signal for Shares

I wrote recently about decision systems. Any configuration that you use to tell you when to buy a share is a decision system and there is an almost infinite number of possibilities. You could decide to buy whenever the sun comes out, which might work surprisingly well. My father claimed that he found shares by closing his eyes and sticking a pin into the prices pages of the FT. He found one share which was an amazing performer, supposedly by this method. It was called Sirdar and made wool for knitting when there was a boom in knitting.

I was never convinced by my father's approach but have been tempted by many methods over the years. I like Coppock which is based on monthly charts and gives very good signals, especially when combined with other techniques. I have found another commentator who also likes Coppock and he is predicting that a huge new bull market has begun, that's my man. - he is talking about the US, sadly the only stock market that matters.

I have also noticed that if I base my moving average buy signals on longer term charts, charts where each candlestick represents a long period, that this removes a lot of the noise (meaningless short term price movements) from the chart and the resulting signals are both relatively rare and highly effective.

My latest killer combo is a combination of a Coppock buy signal with a golden cross on a 3-month candlestick chart. Using this technique one of the most innovative businesses on the planet (my latest catch phrase) is on the brink of giving a buy signal having just come out with some exciting news.