The 56 Point TA; Charts With an Attitude Message Board

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Strategies & Market Trends : The 56 Point TA; Charts With an Attitude

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To: Densiebj who wrote (35915)	6/18/2000 3:49:00 AM
From: Doug R	Read Replies (3) of 79254

D, Now that I've let a week go by before commentary on your IL self-test regarding GTNR...and since a wave of "unescorted" recipients of the seminar manual are likely about to need, understand and hopefully benefit from this info::::: An IL CANNOT exist without a proper ACT from which the IL can be constructed, "measured", "quantified", "defined", "relatively understood" and/or utilized. An ACT is ALWAYS seen as a very short term acceleration of uptrend that can (but not necessarily) lead to a monster, short to intermediate-term advance. The IL targets an unreasonably expected supply/demand dynamic within that time-frame (short to intermediate term). THE IL IS NOT A LINE TO BE USED IN OPTIMISM. The IL is a line you should never use as an expected target. An IL is best used (99% of the time) as a tool from which to measure downside potential AND subsequent upside reaction to reaching the downside. IF a chart exhibits an ACT...THAT DOES NOT MEAN THE IL THAT KEYS OFF THAT ACT WILL BE REACHED. An ACT will only dial in an IL when the ACT is preceded by at least one other uptrend line. THAT's what ACcelerated upTrend means....at least one uptrend from which to accelerate. (It used to be ATR for Accelerated TRendline but Ivan changed it by mistake somehow.....ACT is a good word to use as far as the essence of the formation so I kept it) The ACT is a specific type of acceleration. It doesn't have to be a strict ascending triangle but relatively low volatility exhibited by the daily highs over about 3 to 7 days' time on higher volume relative to the prior 2 to 3 weeks is definitive enough. Knowing that you should not expect an IL to be reached....If you own a stock that put in an ACT and then DID run to the IL...the best strategy to employ is initiation of EXTREMELY tight trendline stops. To take that a step further would have you considering the establishment of a short position with the ACT as the downside technical target. Remember...always exit BEFORE the technical target is reached. How close to "before" is a personal discretion. With the IL...once an ACT is evident AND the IL is violated (overtaken....,broken to the upside....,etc), a trendline breakdown will almost always lead to a return to the ACT. Once back to the ACT there is a reliably expected upward bounce. To calculate the upside target from the ACT, take the % move from the IL violation high to the ACT revisitation low and apply that % to the price at the ACT low. ie...a stock over the IL tops out at 20 and returns to its ACT. When it hits the ACT at 10 a 50% drop has occured. 50% of 10 is 5. A 5 point move up from 10 is the rule of thumb. This creates a technical target of 15 BUT...you do not expect to sell at 15. If the price gets to 14 1/4 in 4 or 6 days (or less) you've made quite a laudable profit in a short time....you take it. There's ALOT more to the 56er stuff than meets the eye. I don't outline alot of strategy in the manual but all the information to use and develop outsized strategic approaches is in there. Doug R

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