Hi Senthil,
In Telechart 2000's accumulation / distribution indicator, there are
three colors. There is yellow=neutral, green=buying, and red=selling!
Just because a stock goes down does not mean that it is being distributed!
If big lots are buying massive amounts in the morning, and the demand
to buy has stopped by the afternoon, it would not take too many shares
to bring the stock down! Most experienced traders will allow the sellers
to get out and take the stock down so these traders can buy more at
lower prices! All of a sudden, all the money managers start buying
at the same time! This is why a bullish stock will have very heavy volume
on higher closing prices and lower volume on lower closing prices!
On bearish stocks, the reverse is true! Higher closes will have low
volume and lower closes will have heavier volume. Granted this
theory may be difficult to detect in very tight consolidation periods
as in Adobe Systems right now! But it is in an uptrend regardless,
or else it would not have remained in a consolidation so close to
it's recent 52 week high! The breakout will most likely be equal to that
of the last rapid jump upward! Then it should consolidate once more
or start a longer term upward consolidation channel!
http//www.warden.com
worden.com
These are Telechart 2000 sites, but they have an easier
program outside of the internet with daily downloads for $29!
If you bought the 45 call before earnings, I think you should have sold
into the strength at $52 to $53!!! Even though the calls went as high
as $8 they will probably never reach that level again before expiration!
I have looked at the options and they do not seem to have a whole lot
of premium tied to them! Usually stocks with greater daily share volumes
have greater premiums because there is more people looking to buy and
sell those options! ADBE could break out sooner or it could be later, but
really no one knows the answer! If you have a profit of 100%, you would be
foolish not to take the profit now because of the short-term downtrend
channel ADBE is in now! The closer to the expiration date, the lower
the stock may be! If the stock does not break out before expiration, you
will regret NOT taking that profit! On the other hand, if ADBE breaks
out before then and you already took the profit, so what! You made money
and now you can look for your next deal to be made! Don't trip over
penny's when your trying to make the dollars. Don't go for the ONE big
payoff, when it's the many small payoffs that make you the steady cash flow!
This is the biggest problem most investor's have!!!
What I like to do is dollar cost average in buying a stock like adobe,
then I sell covered calls into strength! I sold the $55 October call
for over $4 per share on all my shares when the stock was $53 and today
it's much lower than that! This way, I know I'm making money no matter
what and I get to keep the stock! Usually, the volatility in a stock
will not happen until the day of expiration. What I mean is that
option expiration days can add to a stock's weakness or strengh, which
ever is the case! It may cause ADBE to break out that day, but it
would not do you any good holding on to the option then anyway! There
may be a lot of people that sold naked puts and will be put the stock
on expiration which means a lot of people will have to buy those shares
and ADBE will go up the Monday after expiration! No one knows what will
actually happen, but either way, ADBE is an excellent pick for the
intermediate and long term!!!!
Angelo
wadecook.com
Senthil Sankarappan wrote:
>
> Hi Angelo,
> Could you tell me a bit about this telechart's Accumulation/Dist ratio?
> I feel that this could be one of the best indicators to watch since this
> tells if people are really buying or selling a stock. Can some of these
> info available for free some where in Internet?
>
> I hold lot of ADBE shares for long term. But for short term trade, I
> bought Oct 45 call after ADBE said they will beat the estimates. Even
> after the good news, the premium was only 2 1/4 and I grabbed some since
> I thought ADBE will easily reach 50+ since they had the guts to
> pre-announce. Now the calls are more than double but they went as high
> as $8 when ADBE was at %53. While I am happy to make 100% in few weeks,
> my confusion if I can hold till the option expiry coming in two weeks or
> bail out now. It will be a huge disappointment for me if ADBE closes at
> $45 on the option expiry day for some reason. That's why I got
> interested in your prediction of ADBE shooting back above $50 in a week
> or two. You can freely tell me what you feel. The final decision and
> outcome is my sole responsibility ;-) Originally I bought the call with
> the intension of leaving till the last day but now ADBE's movement even
> in such a strong tech rally today was not at all good.
>
> Thanks for your time
> -senthil |
