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My New Favourite Buy Signal for Shares

June 12, 2023

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.

There are two men of genius who stand at the heart of the technology revolution unfolding across the world. One of them is Jensen Huang of Nvidia and I have written at length about him. Another, who is not exactly new to Quentinvest is Elon Musk and I realised, when watching a recent presentation by Tesla which outlined their (typically modest) plans to save the planet and make us effortlessly sustainable, that he has surrounded himself by a glittering array of talent. It must be incredible fun to work for Tesla at the moment, rather like being part of Leonardo da Vinci’s studio during the Renaissance.

What a time to be alive as you might say. They are not the only geniuses. Indeed it is striking how many great corporations are led by hugely talented individuals and how many countries, not the UK as it happens, are led by idiots or gangsters. The Democratic process for choosing leaders appears to be sadly flawed, whereas choosing people because they are actually good at the job seems to work well.

Tesla Has Just Announced Initial Production Plans for the Cybertruck

There are already reportedly 1.5m pre-orders for the cyber truck. I am not surprised. I like my little electric BMW but the cyber truck is something else, like a cross between an armoured car and a piece of lego. If it performs and behaves the way it looks as though it might this car is going to be awesome.

Meanwhile Tesla is innovating across the piece from producing its cars from factories with smaller footprints so lowering costs to generally getting more bang for their buck from almost every aspect of a car. It is incredible what they are doing and explains how they can keep cutting prices while improving performance.

Tesla really is Apple on wheels and one day will be Apple on legs too. I thought electric cars were just batteries connected to wheels with a cab on top but it turns out they are a bit more complicated. This complication gives countless opportunities for improvement and Tesla is doing its best to take all of them. Robots will no doubt be the same and may need even more safety features.

Imagine if you expressed yourselves badly leading to a furious battle in the yard at the end of which your beloved pet dog lay dead.

Just thinking out loud but I imagine all the giants may want to be involved with robots. If electric cars are smart phones/ computers on wheels then robots are smart phones on legs. They may even all end up being SoCS (systems on chips) rather like Jensen Huang saying data centres have become super computers.

Maybe in the Internet of Things everything is going to be an aspect of artificial intelligence but the hardware will be more important as unimaginable amounts of computing power need to be packed into small areas, power supplies become critical and new materials need to be developed to simulate bone, muscle, tendons and what ever.

The robot of the future will be an immortal, master of all known data and constantly learning as more data is generated at an accelerating rate. Incredible to think that this has now become an imaginable future.

On a slightly more mundane level the stock market implications of getting from here to there could be fantastic and make everything that has happened so far look like just a taster. No wonder some tech shares are climbing even though the interest rate outlook is still unclear.

Will Tesla be playing with the big boys?

This is a key question. If we imagine a world where the technology revolution is going to be led by a relative handful of gigantic corporations among the shares you want to buy now are any in companies which end up joining that group.

Tesla is an obvious candidate because it already has the largest footprint and data store in the world of electric cars. This is perhaps why news that GM was going to follow Ford in using their charging network was regarded as positive for Tesla shares. GM and Ford are going to make cars but Tesla is going to be an ecosystem. Tesla will also earn $3b plus from the drivers of EVs using its charging system.

It is also because Musk and his team think so big. They are playing for massive stakes. Production of 20m cars a year is undoubtedly just a stepping stone for a man who will always need new worlds to conquer.

Strategy – Buy Shares which are ‘3G + 3m Golden Cross + Coppock’ Buy Signals

I think this is a good rule and relatively simple to apply. The only other question is whether the share you want to buy is really exciting, as good as say Nvidia. Tesla evidently has that potential given its plans and what it has already achieved.

Share Recommendations

Tesla TSLA Buy @ $244

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