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Strategies & Market Trends : Technical Analysis - Beginners

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To: shasta23 who wrote (7372)	12/31/1997 10:43:00 AM
From: David R. Evans	Read Replies (3) of 12039

Hello Stefan, You are right when you say that DNS should keep you on the right side of the trend. DNS also contains Dahl so if it's at 7 or 8 I'd bet the ranch that Dahl is long. Chan has given you some very good advice. He is telling you that you must check the longer trend before you buy into the shorter trend. He is checking it by looking at the weekly charts which is a very good way of doing it. I do it by mixing longer term indicators with the shorter term ones. Either way, you MUST check both before you buy. WHY? Well, if you really look at what we are trying to do you discover that we are all looking for a trending stock that is going in the right direction. If you are trading shorter term you want to pick off a nice one week ride, or maybe even a one day ride. If you are going longer term you are looking for a few weeks or even a few months. Either way you need a nice strong move to get you the results you are looking for. I always refer to it as a train ride. The train is going all the way to the end of the rail but you are free to get off at any of the stations along the way. You can even buy a ticket to one station and then decide to stay on a little longer if you like. Buying stocks is no different. You buy a ticket to go to the next station and then must decide if it's time to get off or stay on. It all depends on your initial destination.. The only difference is you pay for a ticket when you get on and get the difference when you get off. To illustrate what I mean, let's take a look at IBM over the last year. If you were riding the StochRSI (14) train you would have boarded at the 1/6/97 station and left the train at the 2/23/97 station. You paid $79.69 on entry and got $79.43 on departure. Not a good trade as you lost $.25. Next trip was from the 2/25/97 station to the 3/14/97 station and once again you lost some small change ($.37). The next trip was much more exciting. You got aboard at the 6/13/97 station for $88.25 and you exited at the 7/30/97 station for $102.88 which is a difference of $14.63. As you can see, all train rides are not the same so you must prepare for them the same as for any other vacation. I will get back with a detailed explanation of a buy routine on IBM in a little while. Until then I hope that this gives you all something to think about.. Does it help??? Dave Evans

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