Doug, a very good point. and in fact in a strong move the Oscillators will get very overbought or oversold and
that indicates (lets focus on an up trend) that at least one more new High for the move will occur and more
likely 2 or 3 higher highs in price accompanied by momentum divergences. I've got a few highlighted in this
post.
what indicators do you rely on for selling when a stock has a strong uptrend and
similarly for buying when a stock has a strong downtrend.
I look at many things, how the other stocks in the sector are acting, how the stock sector fits into the bigger
picture and I can give you an example.
before this tech bottom, which for me has occurred between 12-21-00 ...1-3-00. Money was flowing into
Natural Gas stocks, and utilities and the major drug stocks. everyone who runs a hedge fund knows that
money will rotate out of the utils, energy etc and into tech when the Inflection point comes.
Go back and look at the Major pharms like PFE, MRK, BMY, you will find that they bottomed on March 10th of
2000, the day that the NASD topped out same thing with Insurance stocks and the real value plays that had
been created due to everyone wanting to be in tech. Same thing with the end of 2000.
In fact if you want ot know when they are ringing the bell to buy and sell tech. look at the major
Pharms....... that will not continue forever, few patterns and cycles do.
Value stocks and Investing was so out of favor that Julian Robertson Unwound his multi billion dollar hedge fund
which was into Value investing prior to the us reaching the bottom in value stocks and the concomitant top
of the tech Bubble.
looking at Money flows, and the demand index and the ADX indicators are all helpful, so are MA's,.so is sentiment.
I look at the how the businesses are doing fundamentally.
I'm also giving thought to what the Index averages are doing, and Especially what the FED is doing
To understand why tech stocks and the overall market rallied so strongly in Q4 and Q 1 of 1998 and 1999 and
then again in Q4 and Q1 of 1999-00, One need only look at the very expansive accommodative money supply
expansion mode that the FED was in at the time.
John |
