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Non-Tech : The Critical Investing Workshop -- Ignore unavailable to you. Want to Upgrade?

To: Clappy who wrote (28044)	8/6/2000 10:13:02 AM
From: Clappy	Respond to of 35685

Here are a few links from Disu's thread. These may give you an idea of where the market is headed in the near term. There is treasure located in that thread. If you stop by there, give her a note of thanks for putting all this stuff in one, easy-to-find, location. I've learned a lot there. I figured I'd share it with you... Message 14164978 Message 14166450 Message 14168576 Message 14168687 investors.com This Tidbit hit home with me: >>> Let Rules, Not Emotions, Define Your Trading By David Saito-Chung Investor's Business Daily Do you trade stocks with your head or your heart? In one way, the market is a rational judge of a company’s worth. Millions of investors set prices for thousands of stocks. But the market is not robotic; it’s human, too. Investors’ emotions are on display every day. Savvy investors don’t let feelings rule their decisions. They use a time-proven system and stick by its rules. To succeed with growth stocks, guard against these emotions: HOPE A cardinal rule of buying a high-quality stock is to wait until it flies out of a sound price base on a burst in volume. But many cheat by buying at the bottom of the base. They hope the stock will finish the base, then rally to new highs. Not all bases work out. After peaking at 212 on Dec. 22, Internet Capital Group fell 54% to 96 15/16 over the next nine weeks. The stock hit bottom Feb. 28 and rose the next four days. On March 6, it gapped up 23 points after Robertson Stephens upgraded the incubator of e-commerce firms to strong buy from buy and set a $250 target. Investors were giddy. One message on the Motley Fool’s board ended with the words, “ICGE: A Lean Mean B2B Gorilla On the Prowl and Growl.” But those who saw ICGE’s chart knew this: The stock had lost half its value and would have to rise 100% first before getting in range for a new breakout. That’s a tough feat for any stock. Internet Capital never made it. Other investors don’t cut losses in a stock to 8% or less. They may even add shares. They hope the stock will go back up. Instead, they dig an even deeper hole as a stock falls 15%, then 25% and finally 50% below where they bought it. “If you let your losses get away from you, then there’s no science to what you’re doing anymore,” said Mark Forney, a hedge fund co-manager. GREED A good stock can bolt up 20% in a week or less after a breakout. Disciplined growth investors won’t touch a stock that’s 5% past its breakout. Those who do can get burned quickly. Many stocks will pull back to their pivot before resuming their advance. They also might fall back into their base, leaving the late buyer with a big loss. When a stock breaks out in a brand-new bull market, it’s usually with little fanfare. But in time, buying reaches a frenzy as the stock shoots up almost vertical. As greed climaxes, smart holders sell into the end of the rally. Keithley Instruments doubled in price two weeks after its early June breakout. From June 28, the stock soared another 50% in four sessions. But on the fourth day, it reversed from its peak and closed sharply lower on the heaviest single-day volume throughout its run. The stock is now more than 50% below its peak. FEAR At the end of a bear market, investors are still scared of going back in. But that’s exactly the time when new leaders are setting up to lead the next rally. Cool-headed investors wait for one or more of the major averages to follow through by rising 1% or more on higher volume, four to seven days into a new rally. Not every follow-through works. But the facts show that no bull market has started without one. <<<