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Strategies & Market Trends : Three Amigos Stock Thread
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To: Sergio H who wrote (7880)8/19/1998 10:02:00 PM
From: James Wright  Read Replies (2) of 29382
 
I recognize that one way to determine support levels is to use moving averages. I find that a better way for me is to look at whether a stock has tested and bounced off a consistent, flat line low. Thus, when CADE broke below its long term support level of 3 1/4, I sold.

Sometimes support is defined by the lows on a sloping line during an upward or downward trend. AIRM broke its upward sloping support a month or so ago, and so I sold around 4 1/2. Time has proved me right (at least so far) in having sold both stocks when I did.

I have used the same approach to short stocks that break below their support levels -- for example, WAVO and DSET.

Finally, when a stock breaks below its support level, that support level then becomes resistance which the stock typically will have a hard time climbing back above.

These are simple concepts that have proven themselves over time. Certainly, however, they are not the only valid method for analyzing support and resistance levels.

-- Jim
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