The 56 Point TA; Charts With an Attitude Message Board

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Strategies & Market Trends : The 56 Point TA; Charts With an Attitude

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To: Theodore Johnson who wrote (9031)	12/9/1997 4:57:00 AM
From: Doug R	Read Replies (4) of 79281

Theo, PGBCEB-A stock gaps down (from ONE DAY TO THE NEXT) 30% (give or take a couple % points) or more. "presignal" activity: At least 3 weeks of trading must occur as the last of the sellers are given an opportunity to exit while the bargain hunters and bottom fishers begin to accumulate. During this time, the price drifts lower. the signal: After the price has shown signs of stabilizing, there will be a day when the stock makes a low that is lower than any other day after the gap down. This day will have volume that is greater than each of the 3 or more days immediately preceding. The close on this day will not be on the low. entry: The day following the signal day often gaps up. If there is no gap up, the day after the signal day is a safe entry point. If the stock does gap up, it is best to wait for the gap to close before entry. If one is tracking a potential PGDCEB after the gap down, it will be possible to buy NEAR the close of the signal day if it is obvious that the volume requirement will be met AND that the bid has moved off the low. To maximize profit over time a strict use of the uptrend is required. Always start the trendline on the low of the signal day. The low on the day after the signal day may be valid for construction of a trendline if there is no gap up and if it is a higher low than on the signal day. Another trendline to use is from the low on the signal day to the low of the first pullback and use accellerating trendlines from there (VERY IMPORTANT...as an example: if SGI trade any lower than 14 29/32 today, that will break the current uptrend and precipitate a sell signal). If the low on the day after the signal day is the same as the low on the signal day (after buying more) use THAT low as the start of the trendline. Often, the second or third day's low after the signal day creates a very viable trendline. exit: When the trendline that best fits the entry point is constructed, sell on the break of the trendline. NEVER allow the price to fall more than one tick below the signal day low unless at that time volume indicates the probability of another signal. Doug R PS; That'll be $75 please.

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