Market Gems-Trading Strong Earnings Growth and Momentum Message Board

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Strategies & Market Trends : Market Gems-Trading Strong Earnings Growth and Momentum

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To: Jenna who wrote (1372)	1/10/2001 9:08:31 PM
From: Jenna	Read Replies (1) of 6445

Retracements / Climaxes / Tests... Categorizing the strategies we use so you see the 'big picture' of what we are doing. Today for example in the choppy part of the afternoon there was an intense desire to trade when the market was at its most choppy. JNPR was a good example.. one bar does not make a trend. RETRACEMENTS: The buy stop above the congestion area usually the doldrums. The basic precept is that the short term trend will tend to resolve itself in the direction of the longer term trend. That is why we like to enter the same stock twice rather than search or scan for new ones. Most of our morning rallies (i.e. ELNT) will consolidate usually after a spike high (finishing about 10:10 to 10:25) and going into a reversal by 10:25 to 11:00 leading into the doldrum period 11:30 to 1:30 where the consolidation takes place. The general strategy would be to place a buy stop above the area of consolidation at a prior intraday resistance level... (Hence we entered ELNT, IWOV, TLGD etc) TESTS: That is akin to a stock that has been down for days or weeks and made a new low say a 50 day or 200 day or even a 52 week low and looks about to break out. Those are our "sink or swim" plays... Like MEDI yesterday and today and IDPH today) CLIMAX PATTERNS: Describes the set up we had this morning after the futures were down and analysts were downgrading stocks in the midst of this negative sentiment. These climax patterns which means the reversal occurs from buying or selling exhaustion. We will check the set ups (which are not for this post) so that we can ANTICIPATE the markets reversal. I always talk about anticipating the reversals and looking 1 or 2 steps forward. We enter when the prevailing trend stalls (todays gap and consequent move down) .. We enter usually after the selling climax forms a spike down, possibly moves into a small 1 to 3 bar consoldiation or just reverses the opposite way (hence the term exhaustion... the down move today was exhausted).. Today's move was essentially a "morning News Reversal" a changing of trend after the sharp downward move following the downgrades and various negative news reports. Again we won't get into the strategies.. we use them all the time but in the past few months there were no real reversals to the upside so the work was easier.. you just shorted any attempt to rally. Today we had the reverse: So we went long after the downtrend EXHAUSTED itself. JNPR was the best example this morning of a climax pattern when it reversed its gap down and further move down to the upside. Just so you understand the BIG PICTURE that there is a method to our madness.

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