A simple technique to trade stocks by simply comparing two different stocks. http://thewildinvestor.com

1. Chart
Trend
Comparison
I
like
to
keep
things
simple,
and
that
definitely
holds
true
in
the
world
of
stock
trading,
and
since
I
am
a
pure
technical
analyst
that
makes
the
process
even
simpler.
For
the
most
part,
I
use
screeners,
such
as
the
one
inside
MarketClub,
to
shift
through
possible
stocks
to
play.
Yeah,
sure
it
works
time
from
time,
but
even
that
is
a
little
too
much
work
for
me.
Luckily,
I
found
a
strategy
that
a
third
grader
could
even
follow.
If
you
are
familiar
with
the
financial
market,
then
you
know
there
are
tickers
for
individual
stocks
and
then
tickers
for
indexes
of
various
markets,
sectors,
commodities,
and
so
on.
In
continuing,
a
certain
price
of
a
commodity
usually
tends
to
effect
related
companies.
A
quick
example
of
this
is
the
relationship
between
the
price
of
oil
and
drilling
companies
or
the
price
of
oil
and
airlines.
Basically,
the
change
in
one
entity
alters
the
outcome
of
another,
and
this
is
the
strategy
we
will
use.
All
we
need
to
do
is
find
two
symbols:
an
index
(i.e.
price
of
oil)
and
a
stock
that
depends
on
the
price
of
that
index.
With
these
two
ticker
symbols,
plug
them
into
your
charting
platform
and
see
how
they
correlate.
What
happens
to
the
stock
when
the
price
of
that
index
goes
up
or
down?
I
recommend
testing
a
couple
different
time
frames.
If
the
patterns
hold
for
a
couple
years,
then
you
know
you’re
on
the
right
track.

2.
In
this
specific
oil
example,
you
will
notice
some
equities
that
were
at
its
peak
when
oil
was
around
$140,
retreated
as
oil
hit
new
bottoms,
and
now
slowly
rounding
out.
In
other
words,
you
can
clearly
see
the
correlation
between
the
two
entities.
From
this
particular
analysis,
a
good
conclusion
is
that
we
need
oil
to
hit
this
price
for
the
stock
to
hit
this
price.
If
this
is
your
first
exposure
to
this
type
of
strategy,
then
it
may
seem
a
little
off
to
you;
however,
take
a
look
at
a
couple
tickers
and
you’d
be
surprised
how
accurate
these
prices
move
in
tandem.
It
sort
of
resembles
pair
trading.
With
oil
eagerly
wanting
to
move
higher,
now
is
a
great
time
to
try
and
find
dependent
companies
that
have
been
beating
up
by
lower
prices
and
ready
to
burst
higher.