Hi Instock,
This looks like it'll be a fun, and hopefully profitable thread. I think you're great a picking up the fast trades, and your long/short strategy is a nice one.
DRMD -- well, I re-read the chapter on retracements to get the facts straight. I was wrong about saying that 6 1/4 will become resistance for the current run up -- what the close under 6 1/4 means is that the next price objective is half way between 6 1/4 and 8 17/32, which is 7 3/8.
According to deMark, there are three qualifiers to consider in determining whether or not price will advance to the next objective.
In this case, we are looking at a break through 6 1/4 and trying to determine an advance to 7 3/8.
1) the day prior to the crossing of 6 1/4, the close was down. This would indicate an oversold condition, but since the close was up on friday, this doesn't apply for monday. (if anything it shows an overbought condition.)
2) price GAPS over 6 1/4. this is what to look out for on monday; if this happens, there's a good chance for DRMD to make it to 7 3/8, or even above... (the next price objective above that will be 8 17/32, next above that is 9 15/32)
3) Take the difference between the low & close on friday and add it to the close, which ends up being 6 11/32; 3/32 over 6 1/4. DeMark says if the value is over the next price objective line, like it is here, the possibility for a breakout on monday is not strong.
My problem here is which price objective to use, now that 6 1/4 was reached, but the close ended up lower. Is 6 1/4 still in force? I'm not sure.
As for downside goals, the price objectives would be ~5 1/2 and 3 1/2; this run's high needs to be recorded first before exact goals can be calculated. These are just the original price targets for DRMD on the way up, but I'd say they are probably close.
In sum, if DRMD gaps up tomorrow above 6 1/4, there's a good chance for it to hit 7 3/8 at least intraday. If 6 1/4 looks like it can maintain resistance, then look to 5 1/2 as the objective for the initial drop, with 3 1/2 as the next goal after that.
Looking at the chart seems to support these levels as areas of support/resistance; I'd also throw out the possibility of 4 providing support on the way down, IF DRMD does break down through 5 1/2.
Monday will be interesting to watch.
-dave |
