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Strategies & Market Trends : Stochastics
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To: R. Gordon who wrote (160)2/14/1998 12:23:00 PM
From: R. Gordon  Read Replies (1) of 927
 
Wayne,

A couple more thoughts:

Most stocks tend to go up or stay level as long as the DM+ is above the DM- and visa versa. If you want to hold for an extended period of time, I would take profit along the way - bail if they start getting real close and jump back after they contact (kiss) and separate again. (Check to see that the stock conforms to good DMI patterns) It is also helpful that the stock has high volitility. As you have pointed out, it is best to follow the direction of the market - this means that there should be days when you are not invested and just watching to see which way the winds will blow and the tides will flow.

For a preview of coming attractions - check out the direction of movement before the lines cross. If DMI + is crossing below DMI- and the stock does not budge in price, look for a big upswing when it crosses back above the line and visa versa.

There are periods in most stocks when the lines seem to tangle up. I avoid these situations entirely. I want a nice clean break.

Do not buy when the lines first come together - you must always wait till there is a cross over. The greater the distance between these points after crossover, with a small movement of the stock in the expected direction is an ideal situation. In this method, I am almost never buying at the very top or selling at the very bottom - but I am getting a very high percentage of accurate calls.

Good luck,

Richard
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