Forget intraday stochastics. I consider myself a fairly accomplished technician, and the ONLY time I use Stochastics is for a 39 period %k when it rises above 40 or drops below 70 on a daily chart.
I looked at the 5 minute chart and visually drew a trendline for the morning. It had dropped an hit a floor. Had the drop still been in progress, then I would have looked at the previous day's action to see what that stock did in the mornings against what the market and sector did.
But as it was, the chart said it had slid off and rolled to an almost horizontal position. The market was still moving and the S&P500 was still going, so the profit taking was over and the mm's weren't getting more sell order than buy orders so the price was going to start going up. now wheter it would go up to make any money was the next question, but you didn't ask that, and if one is predisposed to short a stock, they are generally not interested in going long if it turns. Which is unfortunate, because going playing the swing is extremely profitable.
Technical analysis is great, as is fundamental and neural and probably astrological for all that matters. But when you have a heavily traded stock like KO that is moving, get out a straght edge, hold it up to the screen and pick an entry for long or short and go with it. Set a mental stop though.
I don't mean to act like this is easy. When I say check the sector or the leaders of that sector and make a quick assemssemtnt of where the market is going, I appreciate that this isn't a natural ability. But then, if one wants to trade profitably, you have to learn to do that, to exit a loss quickly, to ride a profit, to use tools that work for you. If intraday stochastics are too fast for you to react to, or you lose the bigger picture looking at the detail, don't use them. The chart will never fail you, and never tell you anything other than the truth of the market ssentiment. If its swinging wildly, its also telling you something - that you should be in it until its playable.
Deciding when the best time is something you have to learn and adjust for your speed, risk adversity and discipliones. And that discipline has to establish a strike price. "If it goes to here I will enter long/short and look for the quarter, buck, % or volume /# trade drop off that this stock has shown it responds to..."
That is the front work. And you have to do it, because if you don't you end up believing the chart is lying and you should be staying long instead of exiting, or shorting when you should be waiting. And you only can do that by paper trading as assessing the damage and forgoing preconceptions.
IBM look slike it was ready to short to me a few days ago, along with BGEN. I was wrong. But I'm okay with being wrong, and can exit with a small profit rather than a big loss. I don't want to think I can be right every time, because I can't possibly be. I just want to always be able to do the right thing.
Fast, Good, Informed, Smart, Lucky. Which ones does anyone have any control over? Pick any two and you will be profitable.
lastshadow
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