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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank
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To: seminole who wrote (7416)4/9/1998 2:49:00 PM
From: Jenna  Read Replies (2) of 120523
 
Richard...Moving Averages/volume changes I used for daytrading and position trading but they can be used to any trading.

I don't usually look at the 200 day moving average. I like the 7,21,50 day moving averages. I usually go for strongly performing stocks (at 85-90% of the 26 or 52 week high [sometimes I use 2 week high but that's for daytrading] that have fallen below their 7 day moving average or 25 day moving average, which means they are 'in repose' after strong runs (i.e. FINL,SFSK).. I wait until they show signs of reversing their trend. Usually it's just below the moving 7 day moving average and looking upward to cross it. It is then when volume comes into play. By watching volume indicators like on 1/30 day volume ratio, on balance volume, money flow index or market facilitation index you can get an idea idea when a trend is reversing. When volume is increasing and Money Flow is higher, money is flowing into the stock.

I like to see the volume that is 150% above yesterday's volume or the 30 day average. When volume increases this much, sometimes there is a divergence between the volume and price of the stock. Volume is increasing but the stock goes no where.. that's good. It means its in a 'standby' for some price move. IF you watch the price at this point and it moves up you might have a trend change and then I just follow the trend.. hopefully up. You then prepare for a moving average breakout. The established trend strengthens when the stock crosses ABOVE it's 7 day moving average and could be headed to a 52 or 26 week high.

Another interesting thing to watch is Institutional/insider interest. If you have this price increase and it follows a volume increase, look for large blocks that are traded for this stock. If the blocks are particularly large and the stock is in an established uptrend, I would assume they are 'buys'. Professionals call it at this point a "STRONG BUY". It usually continues. An example of all these criteria being met in the last week is FINL,PFE.
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