[ 8-10 New Price Low]
Hi Ray,
I've been thinking about the 8-10 NPL that you are such a strong advocate of. I was running through some books at the bookstore, and I saw a technical analysis book by Thomas DeMark. In it, he wrote a little section about price snapbacks that tended to trigger themselves after about a consecutive nine-day period, subject to a countdown that I did not take the time to read about.
Seems that you've got a fan of your concept.
Also, I've been speaking to Peg Coleman (who on occasion posts on this thread), and with her Mathematics background we started talking about Bollinger Bands and the statistical relevance of issues that fell out of the bands, two standard deviations out. It appears that quite a number of issues seem to snap back right after a BB breakout to establish a more balanced price equilibrium.
Just look at the Dow on 1/09/98 when it fell out of its Bollinger Band. Or on 10/27/97, when it did the same. At least in this market environment when people believe on buying on the dips will this have an added probability of success for a snapback, IMO. Also, it appears that larger cap issues are subject to greater probabilities for success.
But I was thinking of applying this phenomena to your 8-10 NPL scans, to see if perhaps a greater focus on stocks that fall out of their BBs have a greater potential to snap back as expected.
What are your thoughts on this?
Regards,
Rainier |
