Funny thestreet.com article. TA guy takes bath shorting ASND on Tues
thestreet.com
Technician's Take: Charted Territory: Ascending? Not Exactly
By Gary B. Smith
Special to TheStreet.com
8/5/98 10:23 AM ET
Tuesday, 10 a.m. ... Even as I write this, maybe, just
maybe, the tide is turning back to the bullish side. Why do I
say that? Two reasons: 1) For all this woefulness in the
market, I could only find three shorts on Tuesday. 2) The
short side is getting H-A-R-D!
Example one is Ascend (ASND:Nasdaq), and it was
highlighted by astute reader Jeff Zeitlin:
With the market the way it is, I figured I'd give shorting a
shot. I studied your various columns, followed some of your
ideas. Of course anything I do is my own responsibility, long
or short, but I'd like your opinion on my baby steps. I also
think I've learned something, though it's only been a week.
(No scientific theory this.) Ascend seems a good candidate,
though it'll probably open lower and is most likely because
of the rumored Stratus (SRA:NYSE) buy.
As Jeff indicates, there was a lot going on with Ascend, and
therefore it's a great illustration of just how hard it is to
isolate the outside distractions and focus on your
methodology.
I'll start as I always do with the chart itself.
Pretty straightforward: a major trend line break on heavy
volume. For me, shorting this on Aug. 3 was a no-brainer.
But, here's the hard part. What do you do when you're faced
with this barrage of headlines?
Damn, every bottom-fishing, no-nothing analyst was
saying "buy Ascend." Buy? Didn't they realize this was a
dog? God, I hate analysts.
But, love 'em or hate 'em, I now had a choice. Do I
acquiesce to the fundamental world and fold, or do I press
on? Maybe now was the time to intercede, use common
sense and abandon my methodology.
But, I don't. I stick to my guns and what's worked in the
past. Onward!
An hour into trading and Ascend is tanking.
Hah! Score one for technicians. I was right, and they were
wrong! Yep, it's a zero-sum game, and if someone's going to
win, I'd just as soon have it be me.
But, for whatever reason, I'm wary of Ascend all day. It's one
of those four-letter stocks that has a hypnotic effect on folks.
Everyone, it seems, is either buying it or selling it. What
they're not doing, though, is ignoring it.
And I can't either, as I'm mesmerized by the intraday chart.
And frankly, after a few hours, I don't like what I see.
Now, for those of you familiar with how I day traded, you'll
see exactly what I used to look for in my longs: a breakout,
on volume, from congestion. In fact, as that base was being
built, I kept thinking one thing: how Ascend breaks from this
base will determine if this trade is a winner or loser. If it
breaks down, I might be able to cash out today. If it breaks
up, I'm a goner.
Sure enough, Ascend breaks up on volume, giving me
dilemma number two: do I now play day trader and take my
one-point gain? Or do I again stick to my methodology and
wait? What would you have done?
Yeah, I know. It's damn hard, isn't it? Well, I gotta say, I
walked the walk and held firm. And... Ascend exploded up
Tuesday morning, handing me a quick and painful loss.
Damn.
So, is there a moral here? Who knows. "Damned if you do,
damned if you don't?" "Go with your gut?" "It's just another
trade, forget about it?"
Well, here's my nomination: "Be consistent." If you want to
incorporate fundamental views, then always incorporate
fundamental views. If you want to uses charts, then just
focus on those. What you don't want to do, though, is
bounce back and forth. That's when you'll get in trouble.
Oh, and my second nomination for a moral: "Ascend sucks!"
Gary B. Smith is a freelance writer who trades for his own
account from his Connecticut home using technical
analysis. Under no circumstances does the information in
this column represent a recommendation to buy or sell
stocks. This column, Charted Territory, appears every
Wednesday. Smith also writes Technician's Take, which
appears every Monday, and TSC Technical Forum, which
appears every Saturday.
c 1998 TheStreet.com, All Rights Reserved.
TOP | ABOUT US | CONTENTS | SUBSCRIBE | ADVERTISE | TRADE ONLINE | FEEDBACK | SEARCH | HELP
|
