Hi Mark,
Wow, quite a treatise there. Flattery will get you most places! Ummm, let's see now...I geuss I should look at the uptrend point first. It helps to supply the dates you are using to draw a trend. The most significant trendline on APCO is constructed using the lows on 6/27/97, 7/2/97, 8/22/97, 1/9/98, and 1/21/98. That line has been broken a few times but the stock has consistently returned to it and used it as a...launch pad if you will. That line is currently at approx. 6 5/8 and the stock price averages 20% above that line. 5% below that line would not really provide a good risk/reward ratio for a short play since the line IS moving up every day and you would have to cover at the very lowest ask, quickly I would assume, for a profit. Another note is that there has as of yet been no sustained acceleration away from this original uptrend and, almost as a rule, a significant breakdown will not occur until after such an acceleration.
I would need to know also the parameters for your indicators to make an assessment of your interpretation of them so I'll just discuss the RSI. The RSI deals with closing prices only and ignores intraday peaks. The stock has never closed higher than 7 7/32 so you cannot use 7 1/4 as any sort of benchmark for the RSI. The day the RSI made its high, the price closed at 7 3/16. The recent push up in price had a high close of 7 1/16 so there is no aggregious divergence shown by this indicator.
Now, understanding that exact performance in the past of any indicator rarely duplicates itself, I would like to point out the 13 day RSI activity from 10/17 to 11/7. You can see that on 10/28 the stock made an alltime closing high and there was definite divergence compared to the previous highs on 10/20 and 10/22. To be sure, there was a pullback in the price but only the very nimble would have been able to glean anything more than 1/2 point from a short. A sell at 6 1/4 and cover at 5 3/4 would have been the best anyone could do. That difference in price was of no concern to anyone long the stock at the time and any similar range now wouldn't be either (you can also note real divergence between that point and now but as is often the case, divergence can continue for some time before a stock actually reacts to it and in the interim a new indicator high may be attained). The problem a short here creates is one of nimbleness and even less potential gain since the short would have been initiated at 7 1/8 and most likely need to be covered at 6 3/4 or maybe 6 11/16. Now if that's all your looking for, I wish you luck but as you said, this is a trending stock.
Next time I spot one over the IL, I'll bring you in on it. ABTX was my most recent short-term short play and I pointed out RADAF before that. (I found a great system to spot the best ones ya know).
Doug R |
