Stocks with 'Dead Cat Bounce' potential Message Board

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Strategies & Market Trends : Stocks with 'Dead Cat Bounce' potential

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To: ~digs who started this subject	8/5/2001 6:14:21 PM
From: ~digs	Read Replies (2) of 130

More on this type of trading: It should be duly noted that the concept here is counter-trend trading which is inherently risky. If the stock continues to go down with relentless selling admit that you were wrong and sell it. Don't look back ... just pick a new stock or consider trading using a different set-up. Should you choose to attempt such trades, multiple timeframe analysis is necessary. This is one of the more difficult concepts of TA but is critical to one's success. Also, there is the need for a certain level of ambiguity relative to price targets and stop loss levels. Depending upon the circumstances, I like to keep my stops off the servers and in my head. Occasionally I'll give a stock more room to run against me, but more often I'll tighten my mental stops depending on price action and my read of the tape. Also, once a position is in my favor... I am habitually quick in taking my profits. That might be a flaw on my part, but as the chiché goes... 'you can't go broke taking profits.' Lastly, some of the stocks presented here may very well be at or near all time lows/highs. It is not my intention to point out what one might call an 'absolute' top or bottom. The underlying theme here is simply to play the bounce that is a direct result of extreme price action. My opinion is that a stock has not completed a bona fide trend reversal until it has made a higher high (lower low if newly formed downtrend) in the focus time interval. In sum, if you were fortunate enough to have shorted a stock near its high, do not assume that it was in fact the all time high. Maybe the stock will go higher after bouncing off its uptrend line? You're trading counter-trend, do not hesitate to lock in profits... and limit losses.

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