My first Bear market was the 1974-5 one. My only total loss
came when trading was suspended in Equity Funding a few
days after analysts at several major brokerage houses assured
us all that everything was fine. That taught me to run away
when there is a hint of financial impropriety, that analysts will
not save you from loss - they are often simply ambulance
chasers, and that Persistant selling or buying with volume
is one of the fundamental 'truths' in the market - when the
insiders reveal themselves and overwhelm the traders.
I still have the Equity Funding certificates somewhere.
Bored yet? I survived Oil, Gold, 1987, etc.
I use TA to help identify entry and exit points, and to confirm
trends. I study financial reports, analysts comments, etc to
choose companies to invest in. But without charts they mostly
look alike. After 26 years of speculating, nothing comforts
like a new all-time high confirmed by volume. I have continued
studying TA over the years, trying and keeping only those
theories that have seemed to add value.
Biotecs for 7 years. Always in too early and out too soon.
BGEN, DURA, AGPH, IMNR, CGNE, GNSA, RZYM, ALLP,
LJPC, ISIP, GLFD, AMLN are some I have traded.
That is why I hang around this thread. Hopefully the insights
from others will help me stay in when LGND gets going. The
problem is maintaining healthy skepticism while surrounded
by rampant bullishness. Before this, it has been just me and
my computers, Worden Brothers, Dow Jones NRS, IBD, etc.
These TA ideas are the only contribution I can make to this
thread. I am stunned by the fundamental , financial, and
scientific insights provided by others - and grateful.
TA does not govern anything. It just provides metrics
against which to measure the behavior of buyers and
sellers. There are 'normal' movements that occur in the
absence of important influences such as earnings, secondary
offerings, fires, etc. Sometimes TA can detect a change
in the behavior patterns. If it were infallible, I would be more
handsome and rich.<g> So, if anyone reads these musings,
be very skeptical. Results are not guaranteed. I will post
from time to time if I have time and have something to say.
The rally through Thursday, 9-25-97 was confirmed by
volume, and projects further highs to come - perhaps not
immediately. A correction here would allow some new
money to come in. Friday's decline touched the support
shelf at 16, and then closed just above the 20-day MA,
at 16 1/8, rising at 1/8 pt per day for now. The rally since
April 1997 has been defined mostly by the 50-day MA -
intermediate trader's favorite. Thus far, the rally has been
mostly contained by 20% trading bands around the 50-day
MA. The low occurred on 4-23-97 at 9 1/8 (at the lower
20% trading band), followed by a 2 month rally topping
6-18-97 at 14 1/2, at the upper band. This peak was
confirmed by OBV, and called for a further rally after
some correction. The ensuing correction stopped
near the 50-day MA center-line, ending at 11 3/4 on
8-20-97. Following was a powerful rally to the upper-
band, first touching the band on 9-4-97 at 16 3/8, again
on 9-15-97 at 17, again on 9-25-97 at 17 3/4. These
peaks were confirmed by OBV, calling for further highs,
but maybe after some correction. If a correction begins here,
and continues the behavior since the April, 1997 low, then
would expect a sharp, low-volume decline to the 50-day MA
which is at 14 and rising. Note also that the April - June
rally closing high was 14, and peak at 14 1/2. Thus 14 - 141/2
should provide good support, and perhaps a very quick
recovery to the 16+ area of the 20-day MA.
If this correction does occur, watch the daily volume.
With all the positive background news on LGND, the
volume should remain low, although it could be distorted
by arbitrage activity with ALRI.
Using Elliot-Wave on the Aug-Sep rally, suggests the
next correction would hold at 15 1/2. If this holds, then
the next rally to follow could indeed be a rocket. But
then, the pull-back so far has held at the 20-day MA (16 1/8).
If this 20-day MA holds, then may go to the upper 20%
band, currently at 18 1/2, on its way to all-time high at
19 3/4. The next few days should be very interesting.
On value I have found to TA, is to examine the 'normal'
boundaries of recent trading behavior, so that I do not get
panicked into selling out a position at a short-term low.
My own history has shown this will happen if I am surprised
by a decline. Similar to other forms of pain, I can bear it
if I believe it will end soon. Why not sell before the decline?
We are not sure it will happen now, or how deep it will go.
If it stops at 15 1/2, the commissions and spread-loss will
probably lose money on the out-and-in trades. Even at
14 1/2, it could be so quick as to make it impossible to
get in before LGND bounces back to 15 1/2.
Enough for now. Good luck! |
