Technical Analysis and Charting

Top 157. Apr 21, 1999 11:36 PM

» DanG_6 - Thanks, Tony!

Tony, Thanks for that info on the impending A/D line change. And we heard it here first! They can "Ask Rande" all they want, but the real "poop" is HERE! ("Poop"? Perhaps I should have used a different word. But then again ...).
- Dan

-- posted by DanG_6

Top 158. Apr 23, 1999 2:14 AM

» DanG_6 - One-day reversal fizzles!

A few days ago I posed a question as to whether the action in the Dow that day might be considered a one-day reversal and mark the beginning of the long-awaited correction. Obviously the answer was given today, and that was a resounding NO! Trying to pick an intermediate top using conventional TA in this raging bull is just about futile. This is one "driven" market!
- Dan

-- posted by DanG_6

Top 159. Apr 23, 1999 2:38 AM

» TONYBRIG - Looks like it wants to go to at least 11K

But when will they Sell if Off!
They will surely take their profit!

VBOLHH

-- posted by TONYBRIG

Top 160. Apr 23, 1999 8:09 AM

» KirkL - Charts and Corrections

What if you look at it on a macro time frame?

Remember that 1987 was actually a "correction" as the market was acutally up for the year. 1990 or '91 (I forget at the moment) also saw a "Gulf War Correction".

Otherwise, this chart
http://quote.yahoo.com/q?s=^DJI&d=mys
shows that we have been in a bull since 1982

I believe the corrections we had in 1987 and 1998 were unusual in that they were so large compared to, relative to their time, recent history.

Before the 1998 correction, people were commenting on how long the market had gone without a 10% correction...

-- posted by KirkL

Top 161. Apr 23, 1999 8:16 AM

» DanG_6 - "Surely" is a bad word!

Tony, you may be right, but then again you may be wrong. "Surely" can get you killed. That's why smart long term investors diversify, and short term traders use stops.
Better to be lucky than smart, but luck can't be controlled. Hopefully "smart" can.
Best of luck AND smarts to you.
- Dan

-- posted by DanG_6

Top 162. Apr 23, 1999 8:27 AM

» TONYBRIG - Only problem with stops is.......................

Can be so volatile that it can dip to the STOP
and then kick in again and one misses it.

I dont use em.

VBOLHH

-- posted by TONYBRIG

Top 163. Apr 23, 1999 10:24 AM

» DanG_6 - Stops vs Iron Will

Tony, for short term trading where you are concentrating your capital into just a very few stocks, you must have some kind of "damage control" that will keep you from being transformed from a willing short-term trader to an unwilling, long term investor. Stops are not necessary if you have an iron will and can make prudent decisions in the heat of battle. For those not graced with super human will power, there are appropiately placed stops that can be placed during the "quiet time" when the market is closed and you have time to make prudent and unemotional decisions. Of course the key word is "appropriate". A good place to start is 5% under the last minor bottom. Slightly more for extremely volatile stocks.
To date, many of the volatile stocks have recovered after a gut-wrenching decline. The day may come, however, when that won't happen. Your stops will always take you out of a "terminal" stock. Your will power might not.
- Dan

-- posted by DanG_6

Top 164. Apr 23, 1999 10:44 AM

» KirkL - EMC and Stopping out

Dan
Can you look at a chart for EMC and tell me where you would have put the stops as it was going up. Then it had a major correction... would you have stopped out before it recovered? I find many that buy the high flyers put in stops at maybe 20% and get taken out on 21% dips (for example).

-- posted by KirkL

Top 165. Apr 23, 1999 1:16 PM

» DanG_6 - Tall Order, Kirk

Wow, you place a tall order! I'll give you some "eyeball" numbers based on 5% stops, though. Also, you must realize that Magee uses not only minor bottoms as "basing points" for stops, but also minor tops. Also, these are not necessarily designed to take profits, but to first of all limit losses, and secondly to protect accumulated profits. If you can take profits on strength, so much the better.
So quickly, suppose EMC had been purchased during the consolidation rectangle which formed in February at somewhere near the bottom of that formation (say 97 or so). The minor bottom was at 95, so the stop would be placed at around 90 1/4. Once the price broke out of the rectangle top at about 110, 110 becomes a "basing point" and the stop would be moved to about 104 1/2. A minor high was formed in mid March at about 122+. Since the ensuing low was about 111, the stop based on 110 at 104 1/2 probably would be left alone. When 122+ was broken decisively, on say March 29, the trader would probably raise the stop to .95 x 122 1/4, or about 116. That final protective stop would have been hit on April 15 at, hopefully, 116 or thereabouts. This is assuming profits had not been taken on run-ups along the way. I think that's how a short-to-intermediate term trader might have played it, and it is probably how I would have handled it, hoping of course that I would have had the insight to sell on the run-up to the top of the "channel" at maybe 120 or so in March or even better at 130 or so in April. If not, well 116 is better than a jab in the eye with a sharp stick!
- Dan

-- posted by DanG_6