Dec. 98 to Mar. 99 slide was populated with false rallies (I count at least SIX), whereas this slide has been defined by a steady decline (this does lend creedence to the "falling knife" analogy, I must admit).
Hence, there has been NO opportunity to build any momentum, whether real or false for the past two months. This has to be adjusted for at some point in time, regardless of whether the company recovers or it eventually goes belly up (with regards to PAYX on that one, yeah right :)
In normal circumstances I agree with trading on the uptrend of MACD, but in this case the chart shows built up pressure to reverse many times, with the opportunity never occuring (MACD attempted to rally four times near this recent bottom, and was rebuffed each time). It may fall back through one more time, maybe not, I personally don't think it will.
Your method makes a lot of sense, and it sure helps in trying to establish buy in and sell out price levels. I don't see anything wrong with doing things that way, and it sure helps limit downside risk. My approach is a little more risky, with the potential higher reward as my objective.
I saw apparant good technical support at $26 as defined by Sep. 98, Dec. 98, and Mar. 99, and assumed the same thing would be happening here.
The CPI is out, there is no inflation, and the general market is responding. What you'll see is fund managers trying to "sneak" some of their money back into blue chips, now that the numbers are out. There will be no mad rush, but the pressure will definitely be working to our advantage.
Let me know when you see confirmation, and what exactly you see, I would appreciate knowing. Thanks jim g, best of trading to you too!
Regards, JB |
