Uncover the trades between the lines by locating the momentum in the charts. Dennis Gartman explained how to find the trends.
Do more of what works and less of what doesn’t, Gartman said. It sounds simple and it’s the best path to profits, as far as he is concerned. Cut the losses and add up the winners. To find a potential winner, he looks first for a fundamental reason to buy something and then turns to its chart to affirm his position.
Specifically, Gartman looks for points of consolidation and gaps on charts to tell him when a trend is really intact and whether it might push higher or lower.
Gartman admits that even the best chart analysts lose money on 60-70% of the trades they put on. The trick, he said, is adding to the winning trades while cutting the losers.
> The Traders’ Styles
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Trader disclosure: On Feb.12, 2008, the day of taping, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (INTC), (YHOO), (DIS); Najarian Owns (BIIB), (C), (CSCO), (MCD), (MS), (MSFT), (YHOO), (XLF); Najarian Owns (AAPL) Calls; Najarian Owns (FRE) Puts; Finerman Owns (GS); Finerman's Firm Owns (AAPL), (GE), (MSFT), (WMT), (YHOO); Finerman's Firm And Finerman Own (HD); Finerman's Firm Is Short (SPY), (IJR), (IYR), (MDY), (IWM); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; Seymour Is Short (VIP) Puts
Gartman Is Short (AIG)
Gartman Owns (GLD)
CIBC Gartman Index Owns Wheat
CIBC Gartman Index Owns Gold CIBC Gartman Index Owns