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Strategies & Market Trends : MDA - Market Direction Analysis

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To: double-plus-good who wrote (51167)	5/18/2000 7:12:00 PM
From: Michael Watkins	Read Replies (2) of 99985

d+g, I know you asked LG this but I'll add my two technical cents in as well. If you plan to position trade a short on these, simply follow each up day with a sell stop (mental or otherwise) say 1/2 below the day's low. I.e. AXP today (thursday) had a higher low and higher high than the day before. An up day. If price takes out the daily low immediately after an up day, its highly likely that it has reversed -- particularly when the stock is moving at or near recent swing highs or a down trending moving average (like 13 day or 20 day). I would not generally recommend that you use this strategy except at aforementioned tests of tops/and failed rallies in a downtrend. Simply invert the procedure and setup requirements for going long. If you get taken into the trade, your stop will be the high of the day plus 1/2 of the bar you used to position yourself. This way you let the stock prove to you it wants to go down, rather than getting short in advance of a move that may never come. fwiw mw

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