I was not in OO back then, but if you were, or were thinking of getting in, there were a couple of things that could have helped you. When OO peaked at 27.125 on 5-24-96 you had a top. It came down for a while and then attempted to go back up, but only hit a price of 24.50 on 9-10-96 before the attempt stalled. After that attempt, you could have drawn a trendline, downward from 5-24-96 to the 9-10-96 point. If you extend that line, that is what price would have to break through on the up side, to convince me that OO still had juice in it. Now look what happens next. The price comes up to 23.25 on 10-2-96 and stops at the bottom side of the trendline. This is a sign that not much juice is in OO to resume its previous up trend. Then you could look at the volume from its peak, to its retreat, and back up to 24.50. You could see that volume was heavy on the way down, but relatively light on the way back up. If you couldn't see that, you could put a moving average on the price and it would show you that. This is telling you that there is not much participation (strength) on the retest of the highs. These are some basic concepts. There are many other indicators that would be waving red flags now too, but you are right, they are esoteric if you have not familiarized yourself with them. If I tried to explain them, they just wouldn't make sense to you. I am not saying this to talk down to you, it's just that like anything worth while, you would have to study the types and meanings of different indicators for them to make sense. Anyway, after failing to break the down trendline, let alone make new highs, you then have D-day, October 10th, 1996. Oakley gaps down over 2 points on the open on massive, and I mean massive down volume. The volume to sell is so heavy, the Market Makers have order imbalances, meaning they can't buy as fast as people are selling, and have to suspend trading. OO is number one in volume on the NYSE. Oakley, a little sunglass maker, not IBM, GM, Coca-Cola, but Oakley, and it is down 4 points.
7,800,000 shares are traded, more than any other day for Oakley, it gaps down, and finishes that day down 4.00. Now, I have TA volume and price indicators that hit the floor on that day. And all the fundamentalists had to say was crap. Check out the posts on this board from fundys on and around that day, they are completely stunned, and they grab for any straw to deny the reality of it.
Now, if you were real conservative, you probably would have been out of OO at sometime on its downward run from 27.OO. But if you weren't, the failure to break at 24.50 and 23.25 would be saying you should really re-think you long position, maybe tighten your stops (do fundamentalist even know what stops are). But after D-day, you would have to be in total denial (which many were) about the danger you were in, in staying long this stock.
Now what happens next?. Over the next two days, it does a "dead cat" bounce. The term coming from the fact that even if you drop a dead cat out a building widow, it will bounce when it hits the street, simulating some sort of life left in it. But you know it is a DC bounce because it is on less that 50% of the massive down volume, and only comes back about 1.00 (less that 25% of the gap down). Over the next few days, the fundys who think that this is just an aberation buy hoping to average down their losses, and the price crawls back to 20.00 on extremely light volume, because nobody with any real buying juice is touching this. The fundys start to crow about a rebound, and the quality of the company, and Jordan, and who knows what else (see posts), and just when they think they are golden, the other shoe drops.
POW!!!!!!!!!!!!!!!!!!
Down 5.00 points in two days (over 25%) and on larger volume than the weak rebound. There is no recovery in place, this is a continuation, or after shock of the major break. Of course the stock continues to break down over the nex few months, with other gap down days on good volume, and all the while the fundys are still telling you about X-metals, Jordan, etc.......
You see, this was a no brainer. Rarely does a stock have such a major break to the downside and then just pop right back up and resume its trend. Instead, the break is like a crack in the dam, and it takes a long time for all the water to run out, before you can start re-builing it. I would say it is not out of line to say that a liberal TA'er could have stayed until that first big hit, but after that, nobody has an excuse for staying in.
Regarding good books on TA, come over to the Technical Analysis-Beginners thread on SI. Just post anything to me, just say "hi" if you want, and I will guide you to the book list (with ratings) and a great archive of the "best of the best" from the TA posters, which covers every aspect of TA. Anybody else who wants to do the same can as well.
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