Aren’t these swell times for playing the stock market?

You can trade from bed in your cosy bear PJs over your morning Bloody Mary while ignoring those messages from the broker who pitched you Book4golf.com just in time for the big crash.

And now traders are being treated with the greatest of luxuries – free technical analysis of stocks.

So you don’t have to stay up into the wee hours drawing funny lines through charts and pulling your hair out, some Canadian online brokerages are providing free technical analysis of stocks on Canadian and U.S. exchanges.

The charts come to you, complete with bullish or bearish signals and target prices.

As an example, a recent search for bulls on E*Trade’s technical event stock-screening service provided by Ottawa-based Recognia (www.recognia.com) turned up an unlikely raging bull.

According to Recognia, Gauntlet Energy (GAU-TSX) confirmed a bullish technical event with a continuation wedge chart formation when it closed at 70 cents on April 30.

Recognia rates the continuation wedge as a potential long signal and gave Gauntlet a potential target price of $8 to $9.66.

So, naturally, you respond by going out and pawning your mother-in-law’s jewels, backing the truck up on Gauntlet, loading up and waiting for that 1,383-per-cent profit.

Right? Well, not exactly.

Although the continuation wedge may suggest a model chart with all the right curves, it doesn’t quite tell the whole story.

Charts may look smart, but they’re dumber than a sack of potatoes.

If you asked them about fundamentals (ie. Gauntlet’s horrid balance sheet and underachieving wells), the charts would just shrug their shoulders.

Unfortunately, that sexy continuation wedge has no idea the Calgary oil and gas junior has had water problems in its wells, slashed production forecasts, had its CEO jump ship and ranks as one of the most hated stocks in the oilpatch in years.

The point is that technical analysis can be a dangerous thing if not balanced with a company’s fundamentals.

If you’d jumped all over Gauntlet based on Recognia’s latest signal, you could’ve taken a 71-per-cent hit, as the stock tanked from 70 cents to 25 cents in the two weeks after the bullish alert (for Gauntlet’s chart, see COLD ALBERTA STOCK, below).

Yet, Recognia’s technical analysis signals are right more often than wrong, even with Gauntlet. Of its previous four signals for Gauntlet, Recognia was on the money.

Last July 10, Recognia observed a megaphone-top formation on Gauntlet which it deemed a signal to sell the stock short. Within seven weeks, the stock plunged from $7.60 to $5, barely missing Recognia’s possible target range of $4.10 to $4.80.

Last Sept. 10, Recognia reported a continuation wedge in the Gauntlet chart, giving it a possible target of $11.10 to $12.40 from its price of $5.70. The stock never reached that lofty target but did hit $8.25 within three months.

Last Nov. 18, Recognia gave Gauntlet, then trading at $6.65, another long signal based on a double-bottom formation with a possible target price of $8.20 to $8.50. Within a week, the stock hit $8.25.

On March 18, with Gauntlet trading at $3.45, Recognia noted a descending continuation triangle, calling it a short-sell signal with a possible target of $2.50 to $2.70. The stock tanked almost immediately and outran the target by a country mile as it was promptly relegated to penny-stock status.

We searched Recognia’s bullish signals on TSX stocks over $1 for the week of April 21 to 25 and, of 11 stocks that showed long signals, eight have had significant rallies since then (most were not generated by major news), two have stayed in a trading range and only one has had a significant drop.

Recent signals from Recognia have identified bullish charts with ascending continuation triangles for two Calgary oil and gas companies.

Tusk Energy (TKE-TSX) was touted on May 15 at $3.56 for a possible target of $4.20 to $4.40 while Thunder Energy was singled out on May 13 at $6.89 with a possible target price of $8.50 to $8.80.

All in all, technical analysis, developed in the early 20th century by Charles Dow of Dow Jones Industrial Average fame, can be a valuable tool. But don’t forget to read the disclaimer. There are reasons why the terms and conditions for using Recognia on E*Trade are only a bit shorter than War And Peace.

And one of them is named Gauntlet.

* SAGE WORDS: “To knowledgeable investors, chart patterns are not squiggles on a price chart; they are the footprints of smart money . . . and it pays to look for the footprints.”

– Thomas N. Bulkowski, Encyclopedia of Chart Patterns

HOT ALBERTA STOCK: BIOMIRA
BRA-TSX $2.12
Up 37 cents (+21.1%) on 2,442,100 shares (for week ending May 16).
Whoever dubbed this a show-me-the-money market that had no use for speculative companies without revenue such as biotechs, go stand in the corner. Biomira, the Edmonton developer of cancer therapeutics, has more than doubled its 52-week low of 85 cents to join a rousing biotech party. How long must we stand in the corner?

COLD ALBERTA STOCK: GAUNTLET ENERGY
GAU-TSX 30 Cents
Down 20 cents (-40%) on 7,262,900 shares (for week ending May 16).
Just when you thought it couldn’t get any worse for Gauntlet, there was more bad news from this Calgary junior oilpatch disaster that has gone from the penthouse to the outhouse in a matter of months. Debt-riddled Gauntlet announced lower-than-expected production performances and warned production may get even worse, precipitating another round of frantic selling.