Steve, RE: Reason to buy! TM did it! GGGGGG not
Seriously Steve, there are some reasons to buy and Berney kinda glosses over them with the philosophy of buying far away from the weekly DT line. The other part of that is that you have to sell them relatively quickly. And, and-, there are some reasons NOT to buy also.
The down trending trading channel (Da BEAR Mkt) has some peculiar characteristics as far as investing is concerned.
1) The weekly down trend line: It is steep enough so that if you buy near it and it doesn't happen to break it to the upside you are underwater right away and will be until the bear takes a nap!
2) TIME: You option traders are used to this, I'm still learning to appreciate it. If the DT channel is steep enough and NARROW enough, you are in deep dodo no matter when you go in! In these kind of situations usually the drop is faster than any local rise; Therefore it is completely possible that even if you buy in at the lower support line and the stock starts back up s l o w l y, time and the DT line take over and you get whammed before the price gets back past the entry point with enough profit for you to say "I'm out of here" and sell. Usually when most people get to this point they think it will "go on up" or they say "I'm gonna wait and it will go on up!" We've all been here!
3) Other lesser trend lines in a weak stock: I don't know how many 15 minute, 60 minute, and daily trend lines you have to navigate through just to get back up to the weekly DT line. On the weak stocks I bail at the 5 minute DT line, if it smashes through it, or I am lucky enough not to see the line and the price goes up through it, I switch over to the 15, so on and on until I run out of time and/or patience. Lately Berney has observed that the 15 minute charts work well, especially on Indexed funds and some strong stocks. When he gets skeered, which is frequently because he's smart, he reverts back to the 5 minute charts and bails.
You experienced trader know all this stuff, in fact you probably take it for a given that everyone knows it, I just thought it may help to articulate if for some of the folks that visit here...
CU
Paul Kellam
BTW Berney, I saw Friday where the Fed drained the swamp first then put the plug back in around noon. A very fortuitous decision IMHO. |
