Hi Terry,
Sounds like you found a method that works - that's the most important thing. There are, for my own method, only a few patterns I like to trade - many patterns are not conclusive or could go either way or have a mediocre probabiltiy, so I stand aside. Basic distinction is between trend and trading range stocks.
I like bull island flags (ones that look like they are coming). Confirmed head and shoulder for short (these can reverse so you have to take your profits on blow off).
As for the time fram with ZITL: it is said that any consolidation flag must move within 2 weeks or it is likely to fail, so I'd give ZITL 2 more trading days, 3 at the most. That's when some important MAs will cross if it stays here and yes, that's probably when the small number of buyers will become less numerous than the small number of sellers and on light volume the stock will gap down... that's one scenario...
The other point is that with these stocks you are dealing with stories, dreams, fantasies so the action can be unpredicatble. For instance I had reversals on SYSF and VTSS after blowoff and retracement. This is rare (1 out of 8 or 9) but is more likely to happen in stocks where there is no cash flow and lots of fantasies... There, volume picked up and you could just see the buyers coming back in and keeping the price up until it fnally moved up to a new high.
I recommend Alexander Elder, Trading for A living; and Edwards/Magee Technical Analysis of Stock Trends; also Pring, Technical Analysis Explained is interesting...
I agree with you, TA is better than guru recommendations - most of these people are (unwitting) agents of distribution IMO and by the time advice hits a newsletter the profit has been made or most of it... and distribution is underway.
BTW, for longs, I ike QCOM right now - it is building up slowly from the bottom of a sine wave and should hit 50 or so in a couple of weeks.. one of these days it will break through the wave.
Thomas |
