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Technology Stocks : THQ,Inc. (THQI) -- Ignore unavailable to you. Want to Upgrade?

To: Apakhabar who wrote (13354)	2/12/2000 7:24:00 PM
From: Raymond James Norris	Read Replies (2) \| Respond to of 14266

have to concede that I didn't go back to 1995 and thus did not start at the proper low. My charting was flawed by having a "four year trendline" drummed into my head when of course, it's really almost a five-year trend I don't understand how you didn't see that in the multiple charts I posted here. I'm glad we agree now but a lot of time was wasted that could have been spent elsewhere. In any case, maybe it would be best to return to the subject of TA and talk about THQ's 200 DMA. That's fine but your opinion on the effectiveness of using the 200 DMA does not change the break of the long term trendline. But just look at the 200 DMA plotted for four years for THQI. Look at it! It's awful. It provides very good support in June 98, Feb 99, May 99, and in December 99. The price almost reached the 200 dma in August 97 and in March 98, so that can count as another two supports. Six times. Not bad, huh? Seems like the average is portraying the information it is meant to convey (i.e., it's valid). But Ray, during the same four years there have been six major breaks below the 200dma. You're misusing the 200 day moving average. Question: What is the most important piece of information conveyed in a moving average? Answer: Its slope. During the 5 year run, the average's slope has not turned negative. Well, until now. The 200 DMA's slope has shifted from 0 to negative this past week, he first time in several years. The trendline break was a harbinger of things to come. Remember: the trendline was broken 3 weeks ago, not this past week. Now you charge back, "THQI has broken below its 200 DMA a few times in the last 5 years." That is true, but the breaks were: 1. Not on as strong volume as we had last week 2. For only 2-3 weeks after which the stock quickly rebounded 3. The 200 DMA's slope did not turn negative during the breaks as it has now Take a look at the 200 DMA going back to 1992 and you'll see how useful the 200 DMA. During THQI's decline from $60 to $0.60, THQI tested its 200 DMA 4 times and failed to break above it. The stock finally broke above its moving average in early 1996. If you had bought as soon as the 200 Day moving average's slope turned positive (June 1996), you would have profited immensely. I've made 2 charts. Up arrows indicate support; down arrows indicate resistance. stocktrendz.com stocktrendz.com Traders do not buy when a stock hits its 200 DMA (at least professionals don't); they buy when they see the stock fail to move back above it or below it. When a stock is declining and breaks through its 200 DMA, you dont immediately short; you wait for the stock to rally back to the average and fail to break above. I bring this up because THQI broke its 200 DMA 3 weeks ago. Last week it rallied back to the 200 DMA but failed to recover (the 200 DMA provided resistance and effectively shifted its role from support to resistance). That is a bearish sign. Couple it with the break of the long term trendline, the most bearish MACD readings in 7 years, and you clearly see what the facts indicate. At this point, attempting to argue away how severely weak THQI is futile. You can only convince 2 people: 1. Yourself 2. Those totally unfamiliar with the mechanics of TA Conservatively Yours, Raymond J. Norris