Sigmund, I visited the Lizard thread. Here is what I see.
People on this thread seem to be well informed. They are into price
patterns(trend lines, support and resistance lines, and so forth) more
then they are into indicators although they make use of MA. THQ has
broken its trendline on 1/7/98 at $20.56. I beleive this is the
main reason they will be shorting THQ. I have not talked to any one
of them. The Lizzard in one of his memo makes it clear that he will
short a stock if it breaks its trendline. I beleive Mark said he was
going to be shorting THQ at $19.25(I am not sure about his name).
The situation with THQ goes well beyong breaking of the trendline in
my opinion. Breaking of the trendline is a sign of trend reversal.
Some author say that if the price goes 3% below the trend line then
the downtrend is confirmed. THQ price went from $20.56 on 1/7 when
the trendline was broken to $19.56 on 1/16. This is more then 5% down. Therefore, I beleive the Lizzard thread is ready for shorting.
However, I don't beleive this is the whole story yet.
You remember the time I made the statement that I was not going to be
posting TA info on THQ(I see so much confusion now I thought I would
try to shed some light on what is going on). The reason I said that
is because I saw THQ taking a dive from $23 down. Before then you remember, I made the statement that THQ was going up $3 to $4 and everybody came down on my case. If I tell you that THQ is going up and you come down on my case, do you think I have any inclanation on
telling you that THQ is going down good!! I don't think so but now
thinks are different I guess since everybody knows it is going down
right now.
Here is what I see. TA indicators showed a while back a Head and
Shoulders(H & S) formation for THQ. If you have Dr. Elder "Trading
for a Living" book then open your book on page 102. H & S is a dangerous pattern in which an uptrend reverse into a downtrend and
the price could go down deep. However, there are few times where
H & S don't succeed and I think announcement of good earning could
reverse the process and help THQ. Here is a description of the
H & S:
The left shoulder starts at 12/02/97 and goes to 12/18/97.
The head starts at 12/18/97 and goes to 01/06/98.
The right shoulder is under construction under now.
A H & S pattern has a neck line. When the right shoulder breaks thru
the neckline the uptrend is dead. The neck line will be broken if
THQ goes down below or arround $18.50. If this happen here is how
far down THQ could go. The distance from the head of the H & S to
the neck line is four dollars. This means THQ will go down about
four dollars once the neckline is broken. This means it could go
down to $15.00 or $15.50. Usually the stock will start gathering
support at this point. However, THQ has what could be another right
shoulder(this pattern could have three left and three right shoulders
and two heads,etc.). If this is the case and another right shoulder
is formed then THQ could go down to $13.00.
In conclusion, the fact that THQ is very strong may help it not to complete the H & S pattern and resume its uptrend. Good earning news
will probably resume the uptrend. I know that the Lizard thread
are probably thinking of shorting now but waiting untill the neckline
is broken arround $18.50 is the best bet or you could get hurt in my opinion. If you shorted THQ when it was at $23 then you did fine. One more thing. TA indicators look terrible right now for THQ which is not a good thing. Again, if you are a long term investor then you
will survive all the ups and downs that are occuring right now. If
you are a short term investor then Todd already warned you.
I will be happy to answer any questions if asked in a nice way!!
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