Bill, I totally disagree with Fix and Bartlett. TA is exceptionally useful. It told me that WSP was making a large descending triangle last year with a horizontal bottom around 1.16-1.20, and that when it broke that it would get to around 0.65, so I sold as soon as it broke 1.16 and saved myself from a 50% loss. The rally last winter was simply a bear-market rally back up to the lower boundary of the triangle.
I believe that the recent action is the start of a new cycle. How high it will go, I have no idea.
Don't let people who don't use TA discourage you from using it as a learning and trading tool, particularly in penny stocks. Fix and I have had this discussion before, we have a difference of opinion on the topic, too bad for Fix.
I skipped over most of your post, but one thing I use on momentum stocks is a combination of Bollinger bands with RSI...if the price touches the top Bollinger band AND the RSI gets to the upper limit (most people say 80) then that's a pretty good sell indicator. It might not get you out at the very top, but it is a lot better than a lagging indicator like a moving average, which gets you out long after the top.
The RSI upper limit varies from stock to stock. I find it can range from 70-80, you just have to look at the individual stock to see how it has performed in the past. I use a 30-day moving average for my Bollinger bands, with standard deviation of 2. You can do a lot of tweaking for each individual stock; top RSI 72 with 28-day, 2 std. dev. Bollinger band, compared to RSI 72 with 30-day 2 sd BB, compared to RSI 70 30-day MA 2 sd BB, etc etc til you find out the best combo for a stock. I don't have that applied to WSP, mostly use it to find exit points for my long calls in Nasdaq issues. In WSP I mostly look for chart patterns (triangles, trendlines, etc). I'm not selling anything yet, I just added to my position on the breakout last week.
M. |
