Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: Lucretius who wrote (3693)	11/24/1997 8:17:00 PM
From: Thean	Read Replies (2) of 95453

LT, don't know what you mean by "Don't be fooled?" Well, away for a few days and this thread is swamped with people sitting on hot pan. Well.... OK, a few words about TA. We all realized by last week that all TA indicators were flashing oversold. The fact that we continued to slide tells me that it's time to lighten up on TA as a predictive tool for the time being. Why? For example, oscilating indicators such as Stochastics works very well when stocks move in a trading range. The drillers moved in pretty well behaved uptrending trading ranges between Feb till August and TA worked well many times over. However, Stochastics failed when the mo-money took the drillers to skyhigh 1 1/2 months ago in that it predicted overbought too early. Stochastics hit rock bottom mid-last week. Today is Monday and all drillers continued to slide testified that Stochastics has failed this time in that it predicted oversold too early. A complete mirrow image huh? So the question is TA ever useful again? Yes but it depends which indicators one is talking about. There was some buying last week in response to the first oversold signal from oscillating indicators such as Stochastics. I bought as well. However, towards the end of last week things began to show sign of further deterioration and today's action kind of confirmed that. I felt comfortable in buying last week but not anymore primarily because the drillers are riding the lower BB down and the lower bands are now lower. Case in point, when MDCO shot below its lower BB intraday it quickly found strong buying. I was able to buy MDCO close to $24 both times. However, MDCO's BB has moved lower since and we don't find strong buying below $24 today. I'm listening to you LT. I wanted to buy NE early last week at $30 but not today. My limit order is now 26 1/8. If things turn around before NE reaches 26, I will buy on the way up. On TRADING - People should be reminded that there are many models of trading and not single one works all the time. Time changes and so must one stays current. Be willing to change your trading model when your best or favorite model fails. My favorite Stochastics clearly failed this time and 1 1/2 months ago. Non-oscillating models such as Candles and BB make more sense right now.

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