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Strategies & Market Trends : The Dead Cat Bounce Theory

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To: John Liu who wrote (330)3/30/1997 2:07:00 AM
From: Crabbe   of 1836
 
With method #3 you would have to do quotes fairly often and if it moves lower cancel the old stop limit buy order and place a new one.

With Datek, the brokerage I use that is not too difficult to do.

For that kind of return it should be worth it, as soon as I free up some money from the stock I am presently holding I will start trying method three.

The average dollar figures are just that the difference between the average drop day low and the average drop day close, etc.

They show that if you wait to buy at the close you will lose approximately 97.7 cents of the possible gain from the days low leaving only 89.6 cents of gain from the original average DCB maximum average 1.874 dollars. The reason I didn't try to hold for the next days high is my stop limit sell bottom would be lower than the average open price, and also I would need to free up the funds for the next days purchase.
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