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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade
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To: Ken Wolff who wrote (177)1/10/1998 6:33:00 PM
From: Ken Wolff  Read Replies (5) of 2120
 
DETERMINING SHORT-TERM BOTTOMS AND TOPS OF MOMENTUM STOCKS (continued)

3. After I have noticed a PAUSE, I look for an "in-between" the bid and ask trade. If a dumper has sold down to 9 1/8 x 9 1/4, I will look for a trade at 9 3/16. The in-betweener (trades between the bid and ask) is the second indicator to the bottom.

PUMA Time Sales Chart
------------------------------------
Time Price Volume
10:12 4 1/2 200
10:12 4 1/2 500
10:12 4 1/2 200
10:12 4 1/2 2000
10:12 4 1/2 500
10:12 4 7/16 1000
10:12 4 7/16 500
10:12 4 1/2 500
10:12 4 3/8 15000
10:12 4 1/2 1000
10:12 4 1/2 50000
10:13 4 5/8 10000

Notice on PUMA's Time of Sale chart, the two 4 7/16 trades. The current bid and ask were 4 3/8 bid and 4 1/2 ask. The "inbetweeners" were the two 4 7/16 trades. Buying then picks up and at 10:13 the ask upticks to 4 5/8.

4.Now I will look for buying to pick up in momentum and when it does signals
my bottom call. The timing of bottoms and tops will depend on the particular
trade and how they normally move. Dumpers have been making multiple bottoms lately where as they were only making one bottom prior to October.

Calling the top is much the same as the bottom except everything is reversed.
Again, it depends on the trade.

You can only know how a particular trade will behave by keeping accurate
records or intra-day charts. You MUST track these types of trades to know what percentage of dumpers make one or more bottoms and how often they make new highs in any given market.

Ken
mtrader.com
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