COFFEE FILTER 104
DIRECTED OBSERVATIONS AND ACTIVITIES: [cont'd from Coffee Filter 103 Klatche]
Now let's shift our attention to Visual Aid markings 7 to 8.
At point 7, take your straight edge and pencil and draw a horizontal line, or mentally draw one on the monitor Visual Aid found at cmc.net . Make the line as parallel to your bottom border of your computer monitor or your print-out of said Visual Aid.
This line should basically touch the bottom of the 7 and go through the hash mark at the $100 share price indicator in the righthand Price Indicator axis on your printout. That's close enough for this exercise.
Next, make a notation of some sort, mentally or upon your printout as to where the printout says the spikey hairdo QCOM price "top" is above the $196 horizontal level, so that following this next instruction won't obliterate this top "reference" price point, which we will utilize in a few moments hence.
Now, at the price spike --Marking 8,-- take your straight edge and lengthen the tallest existing spike bar vertically to the top of your printout, making it perpendicular to the previous drawn horizontal line at the base of Marking 7.
Next, at the point of the FIRST price vertical bar touching our very first horizontal line we drew at Marking 7, place your 0 of the Coffee Filter Wedge at THAT beginning point.
Number 5:
What is the arc degree reading from your Coffee Filter Wedge tool where your newly drawn, vertical line extension emerges atop your Wedge arc?
Write your answer here: _____________
HINT:
This "reading in arc degrees" is also known as the Degree of Entropy.
Since it is approx 87-R Degrees,
and since we are trying to be independently alert to warnings of SELLING DIRECTLY AHEAD-TAKE APPROPRIATE PORTFOLIO PRESERVATION ACTION NOW,
this is a true "red blinking lights, bell ringing at the top, buzzer blaring SELL signal, Freeus.
SPOTTING ONE OF THESE DEGREES OF ENTROPY ---in the making or in hindsight--- IS ALWAYS AN UNsustainable price directional movement alert, [whether upwards or downwards], most especially when observed in a short term time frame of reference. "Short term," you query? Yes, even visible ones viewable on as little as 15 minute time axis charts, frankly.
And, in this Visual Aid, we are looking at a WEEKLY Price/Time bar chart, which would fall into the category of an "intermediate time" framework, as opposed to "short-term" for the purposes of this discussion.
Spotting Degree of Entropy price movements, ESPECIALLY in a longer term time frame chart such as represented by this Visual Aid constructed from WEEKLY data, one is also spotting a high statistical probability of there being underway an unsustainable upward price movement, in an intermediate term time frame as well. These Degree of Entropy occurences are to be considered EARLY BELLS for TITANIC SELL/ACTION PLANS EXECUTIONS, Freeus, at whatever your pre-determined trigger point is. [3 trigger points will be drawn in below] In this QCOM Visual Aid, at the time of the upthrust penetration of the $196 per share area, you had almost 10 days to formulate your ACTION PLAN.
I say 10 days, Freeus, because NO ONE you or I are ever likely to meet, sells at THEEEEEE top. I didn't sell at THEEEEE top in Bre-X and neither did most of the people in the stock. But I sold BREX within $3 a share of the top, and did so PRIOR to the blow-off top that occurred within DAYS of my selling into that price rally/strength. [More about my BREX sell later.]
We'll talk more about selecting ACTION PLAN--EXECUTION TRIGGER POINTS a little later, ok? They DO differ for each one viewing historical price data, seeing and hearing INDEPENDENTLY MEASURABLE warning signs, and hearing the "SELL bell ringing at the top" [yes, or the BUY, BABY, BUY!!! bell buzzing at a "bottom."]
Now, let us direct our attention to creating two more horizontal lines, please, which will complete our Second Skillset Objective, ok?
Please draw a horizontal line from the bottom of Marking Y toward the right hand price legend axis of our Visual Aid. Keep in mind, our straight-edge placement is guided by being as parallel to the bottom of our computer monitor or our printout box bottom line as possible.
Number 6:
What is the approximate per share price reading of the intersection between this horizontal line and the righthand vertical axis Price legend?
Write your answer here:___________________
Our last horizontal line drawing assignment is this:
Place your straight-edge at the "spikey-hairdo price top" notation made earlier prior, just above the $196 level. Again, align the straight-edge to be parallel with the bottom of your monitor or your printout. Draw that line from that Marking 8 towards the vertical Price Legend axis on the righthand side of our Visual Aid.
Now, I would like to suggest you mark your 3 horizontally drawn lines in the following manner out to the left of Markings Y, 7, and 8
Marking Y line...please write Support 2.
Marking 7 line...please write Support 1.
Marking 8 line...please write Resistance 2
CONGRATULATIONS, Freeus!!! You have just mastered the second skillset objective I said I'd share: How to identify/draw a price resistance region/band and its opposite: a price support region/band [ref: Coffee Filter 102 Klatche outline.]
Number 7:
Where do you think you should "create" Resistance 1 line on this chart?
Write your answer here:_____________
Number 8:
Do you think the price action bar week ending 5/19/2000 action which extended below Support 1 line is significant?
Write your answer here:__________________________
Is it of a bullish significance or a bearish significance and give a reason(s) for your answer? Write your answer here:_____________________________________________
Our final trendlines which we will now draw are ALSO called "fan lines" and we will create 3 of them.
Please locate Visual Aid Marking 7 and place your Coffee Filter Wedge 0 marking at the prior point where the first vertical price bar touches our hand-drawn horizontal line, now labelled Support 1 from an earlier instruction. Make sure the TIME axis of your Coffee Filter Wedgie is directly atop said horizontal drawn line.
Out to the right of the Coffee Filter Wedge arc, make a dot or hash mark at 67-R, another one at 45-R, and a final one at 22-R degrees of arc.
Now from that 0 point, use your straight-edge to draw a straight "fan line" from that point of 0 beginning to your 67-R hash mark...
...another one from point of 0 beginning to your 45-R hash mark,
...a final one from point of 0 beginning to your 22-R hash mark.
Number 8:
What is the approximate highest share price intersection for 67-R trendline drawn from Marking 7's 0 point? Write your answer here:___________________
Number 8-B:
What is the approximate highest share price intersection for 45-R trendline drawn from Marking 7's 0 point? Write your answer here:___________________
Number 8-C:
What is the approximate highest share price intersection for 22-R trendline drawn from Marking 7's 0 point? Write your answer here:__________________
Number 9:
What was the conclusion in Coffee Filter 103 Klatche about a money management Rule of Thumb activity wrt: a 22-R Trendline indicator?
Write your answer here:_______________________
Number 9-B:
Should a money manager buy at Marking 7's 22-R intermediate trendline? Write your answer and your reasoning here:___________________________________________
Number 10:
If you decided your action should be to NOT BUY, and NOT HOLD but to SELL at penetration of 22-R intermediate trendline/fanline, HOW MANY WEEKS DID YOU HAVE TO ULTIMATELY MAKE YOUR DECISION?
Write your answer here:_____________
[HINT: Each vertical bar represents one week of price action from the $196 per share price penetration to the final 22-R trendline/fan-line pentration.]
ASSIGNMENT
What kinds of decision contribution activities should a money manager be undertaking during those pre-22-R weeks?
A:__________________________________
B:__________________________________
C:__________________________________
D:__________________________________
Klatches now adjourned for some R&R...while I go construct Coffee Filter 105
Porcher-ly yours,
O/49r |
