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Gold/Mining/Energy : Big Dog's Boom Boom Room

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From: chowder	6/19/2008 5:55:53 PM
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A lesson in TA ... Supply vs. Demand .................. There are a lot of people out there who try to convince us that TA can predict future price movement. The FA people say the fundamentals can too. None of that means anything if we don't have buyers and sellers coming to market. So ........ here's how I use TA to allow me to make low risk entries that have a higher degree of accuracy than guessing. I'll use PRC as an example. Look at the last 6 days of trading on PRC. Look at the volume bars. Note how we are seeing volume above average on both the buy and sell sides. Then note how price has stayed in a sideways trading range over this same 6 day period. Every ... single ... day ... shows above average volume. Some on the buy side, some on the sell side. Where has price gone? Nowhere! It is stuck in a trading range between $2.44 and $2.10. Daily chart: Now, here's where we learn what is really going on and how we take advantage of this situation. Look at the weekly chart! If you'll look at the chart from May thru October 2007, you'll see a sideways price base between $2.40 and $3.00. This price range represents a number of people who thought they were buying a winning stock only to see price drop all the way down to $1.25. Those people were feeling some pain! Those are the prayer people. The people praying for price to come up to their entry point so they can sell and get out even. Not all of them of course, but enough of them to make price stall. Now look to the right of the chart and you'll notice that price pulled back as soon as it arrived at the bottom of that previous trading range developed back in 2007. This is overhead supply coming to market. What is happening on the daily chart is that we have enough demand to offset the amount of overhead supply coming to market. We are not seeing selling due to other reasons. If we were, price would not be staying in the recent trading range that it is. The recent price consolidation on the daily chart is bullish! Demand is offsetting current overhead supply. The way I use this information is to wait for price to break out of the recent trading range. If price breaks below $2.10, I will sell part of my position and wait for another entry. If price moves above $2.44 with decent volume, I will add a full position making me overweighted on this issue. It's all about placing the odds in your favor. This tactic alone, over the last 3 years, on the trades I tracked within my portfolio had an 80% accuracy rate when it came to making the buy or sell at the correct time, in the time frame I used when buying. Take it for what it's worth. The lesson was free and has a money back guarantee based on what you paid me for the lesson. <g>

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