The 56 Point TA; Charts With an Attitude Message Board

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Strategies & Market Trends : The 56 Point TA; Charts With an Attitude

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To: Bob Jagow who wrote (22293)	10/24/1998 1:07:00 PM
From: Doug R	Read Replies (2) of 79216

A post for anyone wondering what all this rabbit, shark and cat stuff is all about. (I got a few PM's from people asking what was going on). The rabbit refers to the action in the 5 dEMA of the closes in relation to two other MAs. When the 34 dSMA of the lows is above the 89 dSMA of the highs and both are rising, an upturn in the 5 dEMA is usually good for a decent percent gain. To use it, you pretty much have to be familiar with the long term chart of the stock in question in deciding how far and for how long the signal is good for. It's probably best to avoid those that have seen a good long run with more than 3 signals behind it. On stocks that are coming off a bottom, like many are now, you'll pick up good trenders although at this point a lot of stocks have yet to see enough sustained momentum to get the 34 of the lows above the 89 of the highs. The shark thing is from David J's toolbox...you'll have to ask him about that one. It's a 3 bar pattern of consecutive inside days with the buy (or short) signal coming on the first price bar that is outside the range of the first. Cats are a long story. It's a mechanical signal to go long on stocks that have previously gapped down 30% or more. After the day of a gap you have to wait at least 15 trading days as the stock bases out. Sometimes it takes quite a bit longer than that but there's a lot of them around and most of them are beyond the 15 day waiting period. Anyway, there will be a day when the stock makes a post-gap low on greater volume than each of the 3 previous days. You can even stretch that to the previous 10 days or 20 days if you like but it must be at least 3. When that price and volume activity is seen, AND the stock closes at least 2 ticks off the low for that day, a technical bounce in the stock is due and you'll often see gains of 30% or more. It's not a 100% signal so a stoploss just below the signal day low is suggested. There is no consistent exit method for these plays so I usually just take the first 15% and only occasionally shoot for more. Also, most stocks that have gapped 30% or more usually end up going even lower after the bounce off the signal and another signal day produces another opportunity. This ends up giving a stock a signal history. For stocks with a history, it's always best to check out previous signals to get familiar with how any current signal will behave. The entire process is also referred to as the PGDCEB (Post Gap Dead Cat Exhaustion Bottom) Doug R

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