Stock Attack II - A Complete Analysis Message Board

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Strategies & Market Trends : Stock Attack II - A Complete Analysis

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To: JRI who wrote (30254)	2/18/2002 10:08:42 AM
From: StockOperator	Read Replies (4) of 52237

JRI, Good to hear from you. Let me see if I can answer your question in the easiest of terms. Most traders are looking for repetitive patterns in the markets whether it's a reoccuring chart formation or whatever. Just look at all the software and trading platforms out there that have popped up over the years dedicated to that one task. I believe Murphy just started offering a plug-in for Metastock (I believe) that identifies specific chart patterns. While companies like Tradestation have been in that business for sometime. Hey, it makes perfect sense to say that people are creatures of habit therefore what worked here will most likely work again in some other time frame. What complicates this process even more is the sheer arsenal of tools that the avg guy has today. Just look at the bag of goodies you get with with even the cheapest of software programs. Now combine all these tools with what has been a stockpicking environment, where groups like the telecoms are getting killed and the AMAT's of the world seem to defy all gravity. It can all lead to system overload in your brain causing you to miss the simplist of market clues. At least it did for me and my analysis is geared toward timeframe. Those two bottoms in April and September caught me flat-footed. But I ask you to look at them and tell me what they both have in common. First of all they are the beginning of a new quarter. That's right the beginning of a new chunk of time if you choose to break it down that way. Second, and more important, they both represent the start of a new timeframe that happens to PROCEED a meltdown in prices. The quarter preceeding them was ugly. A simple backing and filling process that goes on in all time frames. Now I know this sounds pretty simple and obviously this is not a pattern that is gonna work all the time but look at it on the surface and you will see that the last six months were very tradeable based on this idea alone. What's different about our current timeframe is that the last quarter of the year saw a huge move in prices. So far all we've had this year has been a sideways pattern in most stocks while they have tried to digest those big gains. Think about it too, because of the structure of the charts your objective here is not to catch the falling knife. Instead it's all about watching those trendlines and looking for topping patterns because we've had the run-up already. A process that is beginning to unfold as we speak as prices start to melt down. So we are in almost completely different circumstances for a whole lot of stocks. I will also go out on a limb to say that as a technician I believe shorting stocks is a lot easier than trying to pick a bottom. It's a lot easier to watch prices rollover as opposed to trying to catch a falling knife similar to April and Sept.. So my call is based on the difference in structure and the overall resistance on the charts. That is not to say that prices cannot or will not breakout here. A bin laden capture or killing may indeed push prices thru these levels. But hey who going to predict that. Personally, I won't touch that one -g-.

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