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Strategies & Market Trends : Technical Analysis - Beginners
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To: BreakOut who wrote (9653)3/2/1999 1:18:00 AM
From: BreakOut  Read Replies (2) of 12039
 
To All,

Increase in daytraders and overall frenzy has caused some wild,parabolic runups in certain stocks (recently the inets).
Many (most) are just hype and pure momentum plays going up 30%, 50%,100% 200% in a day or days. These are in general junk, but don't get me wrong,hype can make money if you can pull the sell trigger. Traditional TA may not trigger a daily sell signal until you left a good portion of the profit on the table because of the volatility of the stock. Here's a quick and dirty daily sell signal (BTW its good for all stocks in all markets):

set up a daily chart with a 3 day ema. The sell signal is triggered when 1)the daily low is above the 3 day ema and 2) todays high is > than yesterdays high and 3) close is in bottom half of daily range (c<(h+l)/2)(in normal conditions I might use bottom 3rd)

this can be done visually or by scan. i always sell this signal. this also can be used in reverse for spoting potential buys (short term bottoms).

Of course another simple sell signal on the parobolic upward movers would be to sell on violation of previous days low.

Oh well, take it for what its worth, hope it wasn't to basic to post. But someone is going to get hurt on these Hype type stocks, just don't let it be you.

DSATDTL
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