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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Joe Lyddon who wrote (30840)	7/31/2000 12:52:53 AM
From: Rande Is	Read Replies (1) \| Respond to of 57584

. . . .Buying the Bottom On a Stock. . . . . Yes, Joe. . .there needs to be a clear and solid bottom. . .but my example started at $1 for the sake of simplicity to show the importance of buying low. I do not mean everyone should buy stocks when they reach $1. . . on the contrary. . .that is often a dangerous place. . . and should be reserved for timing style plays. . .like Rat Dogs, etc. Calling bottoms on individual stocks is always risky, since their price is easily manipulated by analysts, brokerages, newspapers, stock pickers or the company. Calling bottoms is when TA can really shine. When a stock reaches my target low is when I close my eyes and rely on the force, er. . I mean Technical Analysis to show me where the bottom should be. Then I watch the volume and momentum. Then the important thing is to begin averaging in with small positions. . . increasing their size in proportion to your own confidence. . .based on pending events, TA, volume, momentum, etc. Remember this. . . . The only ones that can predict a manipulated stock are the manipulators. Rarely can one say with absolute certainty that a "V" has been put in on a stock until several days AFTER it happens. If it were simple. . . everyone would be doing it. Averaging in and out cuts risk in a number of ways. . .and keeps us from missing moves. . .or having to chase stocks to begin positions. Once we are in, we are just adding. Then again, the best way to reduce risk is to get to the bottom by short-selling to the point that you believe the bottom has been put in. . . then going long an equal number of shares to "lock-in" the low price. . . .if the market looks to take another dump, you can release your long and continue holding your short until it appears another bottom is put in, then add your long once more. . . If it looks like the markets are going to see some rebound, you can begin to cover the short positions and hold start some long ones . . . .or if you are not sure which direction is next, you can hold both long and short positions, which protects you by covering all the bases. We do this when we are uncertain as to a top on a stock. The advantage of having made money on the way down, is that it carries over the flip-flop to the long side. . .again reducing risk. However, I tend to only short garbage stocks. .. .but I go long the great ones. . . .so while this method works great in theory. . .it is just another tool for the toolbox. . .however getting a good TAr to call the bottom on a particular stock is more useful. Rande Is