Directors and company managers get paid a lot of money - shareholders money. They are responsible for many things, not least of which is the sound management of the company, on behalf of you the shareholder.

This year has seen some company disasters; Waterwheel, Harris Scarfe, HIH insurance to name a few. In all three cases, especially the first two, published company figures and annual reports have proved, in hindsight, to have been inaccurate, misleading and just plain wrong. Harris scarfe Directors just recently found accounting irregularities going back half a decade, of which they were not aware ! Waterwheel discovered, or rather couldn't find, missing revenue. If Directors can't keep an eye on their own front yard, what hope do we, the investor have. And what on earth were the auditors doing ?

This is where charting knowledge is essential.

Responsibility for your investing lies with you. So any weapon in your investment armory that sharpens the decision making is useful. I can illustrate this in two ways using the HSL chart.

Say you did own the stock since 1997 or 1998. When the lows as highlighted subsequently broke, that's really bearish, even more so because they broke on large volume. Stop losses have to be taken here. If you did not own the stock, but for some reason were having a look at the company for possible investment, don't buy whilst price is below the moving averages.

Simple Gann theory, ie repeat runs, gave you an easy way to work out where the next low is likely to be, when those important lows broke. One of the reasons I have learnt to take stop losses confidently. (Took a few learning experiences when I first started I can tell you - something every trader comes to experience, and hopefully ends up a better trader as a result) When the lows at 93 cents broke, that's really bad, moving to new all time lows. Never hold a stock on such occasions. The problem is of course though, the lower the stock goes, the harder it is to sell....