Investing Tools: Guppy Charts in TC2000
Guppy Charts – or Guppy multiple moving averages – is a charting method developed by Daryl Guppy. As a technical analyst, Guppy found an interesting way to show both the long-term and the short-term trends on one chart. I have been using Guppy Charts in TC2000 for a number of years now.
I have found that by using Guppy charts in my own investing, I can get a good feel for how the market and my assets are trending,
As a rules-based investor, I only invest my money based on the systems I use. However, by using Guppy Charts I find it easy to validate which assets I am invested in at any one time.
For example, as a 12% Solution investor, I invest in either IWM, QQQ, MDY, SPY, TLT, or JNK depending on 3-month momentum. By checking with my Guppy Charts in TC2000 I can quickly validate the ETF I am in. This provides additional assurance that I am in an ETF that has strong momentum.
What is a Guppy Chart?
A Guppy Chart is a series of long and short moving averages drawn on a chart. Here is what my Guppy Charts look like in Tc2000:
The red lines are a series of shorter term exponential moving averages – in this case drawn on a weekly chart for QQQ. The blue lines are a series of longer term exponential moving averages. The dotted line is the closing price for QQQ.
The chart is drawn with the following twelve exponential moving averages:
Short-Term: 3, 5, 8, 10, 12, and 15 week exponential moving averages
Long-Term: 30, 35, 40, 45, 50, and 60 week exponential moving averages
The resulting chart provides a real quick way to see how the stock or asset has been performing.
Examples of Guppy Charts in TC2000
Let’s look at a few examples of both good and bad trends using different ETFs.
This chart of QQQ, shows a great example of a strong trending ETFs or stocks. Notice how all lines are point up, the longer-term (blue) lines are moving up evenly and consistently, and the red lines are above the blue lines. In addition, there is good separation between the red and blue lines. This is all indication of a strong uptrend.
This chart of Netflix is another solid example. Again, consistently heading higher and good separation between the red and blue lines. In addition, you can see how the trend has been steepening recently as the share price has been consistently heading higher at a quick rate.
This Guppy Chart in TC2000 for TLT does not get much worse. First thing to notice is that the red lines are below the blue lines, meaning that the trend is down. Next thing to notice is that both the red and blue lines often converge on one another. This indicates that there is a bull and bear fight going on with neither winning. These types of Guppy Chart patterns are good to stay away from.
Using Guppy Charts in TC2000 to Trade
As I stated above, I don’t use Guppy Charts to base any buy or sell decisions on. All of my investing is done using rules-based systems that tell me what to buy and when.
I use these Guppy Charts in TC2000 as a quick way to validate the trend of an asset based on my systems. If something is off, I will check out what. Perhaps my calculations are off or I have a spreadsheet error. However, most of the time it does a good job of validate the decisions made by the systems.
A Plug for TC2000
I am an avid TC2000 fan. I use it for all my charting needs, including determine the ETF with the strongest returns for many of the systems tracked on this site. In addition to easy to read Guppy Charts, I have multiple charts and scans set-up to do a lot of the rules-based work for me.
I would encourage anyone who is a do-it-yourself investor to check out TC2000 and see how it might be able to help you as an investor.
If you want to receive a $25 coupon towards your TC2000 service courtesy of Robotic Investing please use the link below.