52 week High and Lows

**teenvestor2** Mon Feb 13, 2006 8:49 am

52 week High and Lows
Not a stock pick, but here is a link to the 52-week highs and lows.

**nodoodahs** Mon Feb 13, 2006 9:24 am

Do you consider the use of a 52-week high and low list to be a use of technical analysis in order to enhance your value investing?

:shock:

**blast_investor** Mon Feb 13, 2006 12:10 pm

52 week low has been a common screening tool for many value investors.

That is because deep value stocks with bad news typically hit 52 week low.

It is not necessary a technical analysis, but this is where investors can find cheap.

**teenvestor2** Mon Feb 13, 2006 12:28 pm

No :?

I use it for falling knives and contrarian picks there is no technical analysis involved. ever.

**nodoodahs** Mon Feb 13, 2006 2:04 pm

http://www.investopedia.com/terms/t/technicalanalysis.asp

"A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume."

It seems to me that you are using a technical analysis screening (today's price in relation to lowest price in last 52 weeks), and then doing a fundamental analysis of the company. By doing this, you are combining TA and VI. And you didn't even know it.

:shock:

This is, in principle, no different than using any other TA screening method that suggested a current "unliked-ness" (and there are many such screening methods), and then buying only those that had good "fundamentals."

I fail to understand the traditional "value guy" hostility to the concept, especially since you use TA in that screening.

**blast_investor** Mon Feb 13, 2006 2:19 pm

I would not consider 52 week new low screening tool as Technical Analysis.

Technical analysis loves new high, like break out, support etc.

52 week new low stocks are exactly the group of stocks that TA believers would dump.

Further more, not all cheap value stocks are 52 week new low. Not all 52 weeks new low stocks are cheap value stocks.

It is just screening tool that many value investors use.

Actually,I do not rely on 52 weeks new low screening tool although it is popular value investing tool.

Here is my article on value investing tools:

http://www.blastinvest.com/article/2005TopLead.htm

**blast_investor** Mon Feb 13, 2006 2:21 pm

My favorite value investing tool is insider buying tool here:
http://www.blastinvest.com/stock-screener/

**blast_investor** Mon Feb 13, 2006 2:26 pm

The difference between TA screening method verses value investing tool such as 52 week new low is:

TA rely solely on price up or down etc to determine buy or sell.

Value investing ultimately rely on asset, earning, or growth to less degree to decide buy or sell.

It is not new low price chart that is the deciding factor. The new low list is just a tool to let investors to find those value stocks that have good asset, earning, and growth metrics based on value investing method.

**nodoodahs** Mon Feb 13, 2006 2:39 pm

I can tell when I've hit a nerve, because you'll reply 3-4 times in a row.

Bottom line, the 52-week low list is a list derived from price action, and price action alone. Therefore, it is technical analysis. Now, it is a very rudimentary form of TA, but it is TA. By combing through the 52-week low list and examing the companies in further detail, you are combining TA and VI.

:lol:

Blast, you mentioned using the average PE ratio over time. Do you know what the average PE ratio over time is? It's a function of the previous price action combined with changes in the income statement. As such, that measurement is 1/2 technical analysis.

8)

**blast_investor** Mon Feb 13, 2006 2:47 pm

:D

Average PE or average earning analysis is a method published by Benjamin Graham in his book "Intelligent Investor".

I do not know at that time any Technical Analysis gurus knew this method or agreed with this. TA folks would never look at "earning" of a stock.

Averaging is a "math" method. But you want to put Ben Graham's method into TA and give the credit to TA camp.

That argument is stretching too far.

**blast_investor** Mon Feb 13, 2006 4:16 pm

On list issue.

There are 7000 stocks in USA in NYSE, NASDAQ, pink sheet, OTC.

It is not realistic to study all 7000 stocks for "value". You got to start somewhere.

Some value investors start with "52 weeks new low". That is very realistic legitimate starting point.

But that is not TA. "52 weeks new low" is not the reason for investing into a value stock. "52 weeks new low" list is the place that value investors might find some good picks. May be nothing there after research.

**nodoodahs** Mon Feb 13, 2006 4:16 pm

I've read Graham's book. That method combines technical and fundamental analyses, as do most valuation methods. If you track Price/Book, Price/Sales, Price/Earnings, etc., over time, you are studying the movement of price over time and therefore are engaging in technical analysis.

Imagine a company with steadily growing earnings and revenues, say 3% quarterly like clockwork. A decline in PE would make that stock attractive to you, would it not? That is actually a price action which provides a market timing signal to the value investor - granted, a slow, long-term timing signal, but a market timing signal, nonetheless.

If a method uses ONLY the balance sheet, income statement, and cash flow statement, it is PURELY fundamental.

If a method uses ONLY the past action of price and volume, it is PURELY technical.

Anything that uses both price and balance sheet items is FundaTechnical.

**blast_investor** Mon Feb 13, 2006 4:25 pm

Ben Graham "averaging earning" method does not need price information.

Suppose a company goes for IPO. No price information, no trade over past 10 years.

Give me a balance sheet, earning statement, cash flow of past 10 years of this company with no price information, I know what the stock is worth. I can decide buy or sell during IPO using Ben Graham's "averaging earning" method.

In the past, I did invest into the stocks in above situation. I believe many other value investors did the same too.

We do not need past price history. But we do need past earning history and balance sheet history.

**blast_investor** Mon Feb 13, 2006 4:54 pm

Here is real life stock market case study of my above statement:

http://www.blastinvest.com/value-investing-newsletter/02_28_2005.htm

GKIS pick of BlastInvest newsletter. We did not use Ben Graham "averaging earning" method to buy GKIS. But the sale of GKIS in the newsletter used Ben Graham's averaging method. We knew from averaging of chicken busines profit from its peers, GKIS had risk of "peaking" earning, therefore, we did not want to continue to invest after our "catalyst" was realized. We sold all and never bought back GKIS.

We did not need past price history of GKIS to make money from GKIS using value investing method. There was no past GKIS price history because GKIS was newly IPOed last year.

**goog** Fri Feb 17, 2006 8:30 pm

I would think that use 52 week low information has something to do with TA. The reason why some people check 52 weeks low list might be that VIs believe that 52 week low could trigger a selloff by those technical people such that create a value opportunity.
In the market, value could be created in a number of ways. TA is one of them though not a major one. As a value investor, the more TAs in the market, more chance for value pick.