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Strategies & Market Trends : Strictly Buy and Sell Set Ups
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To: amoezzi who wrote (13228)12/5/2007 9:48:30 AM
From: chowder  Read Replies (5) of 13449
 
Re: NFI ... I don't like NFI, if looking to go long. In looking at a weekly chart, we have a declining 20 week moving average below a declining 40 week moving average with a comfortable distance between the two. This is a bearish alignment. When you have a bearish alignment, the low risk, high probability set up is to go short.

Weekly chart:



If looking to go long, there are certain set ups that increase the odds with regard to the timing of building a long term position. The odds increase when price trades sideways for a certain period and price then breaks out of that basing period.

In looking at the chart above, note the sideways base that price formed between $9.97 and $4.17 between August and October. If price had broken out above $9.97, it would have been a buy signal. Price broke down, below the base, signaling a sell signal.

Price now needs to build a new base.

Let me show you a good example of buying a stock in a bearish alignment and looking to go long. I will use a daily chart this time because it clearly shows what I'm looking for in stocks that have been beaten down.

JWN sold off from $50 to $30. Two weeks ago price gapped up at the open on huge buying volume. This indicated that institutional money was accumulating. Price has traded sideways the past two weeks. Yesterday price broke out above that two week base, signaling a buy signal. This is a good low risk, high probability set up. The stop would be just below the two week base, minimizing the risk of buying a stock in a bearish alignment.

Daily chart - JWN:

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