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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: Jenna who wrote (115234)	10/12/2000 7:22:57 PM
From: Jenna	Read Replies (2) \| Respond to of 120523

"Late Day Rally, really? At 3:05 ADBE hit its peak high at 139 and was torn down to 129 by 3:40, (after very distinct bearish bars it tanked) at 3:00 FLEX reached an easily discernible double top at 63 7/8 after a nice move up from 61 1/2 (if you were looking at the charts).. The double top reversed to the downside was the end of the rally again we can see this easily on the chart.. Why then pick up stocks with no discernible trend (even a downtrend).. or go into stocks at intraday highs after 5 or 6 bullish bars? We need about 3 bullish bars in such a downtrend on the 5 minute chart to distinguish if this is indeed a reversal or a just a 'bearish flag'.. temporary lull in the preponderant downtrend. Two bars will stop you out. What to do? Look at least for the predominant trend presume the stock will move in that direction. If the nasdaq NQ's are tanking severely why take a chance? At least you have a head start with stocks like FLEX, or NMSS that were in clear downtrends, then uptrends for a number of bars that enabled a clear short and clear long. Choose stocks like PHCM that is predominantly down and don't 'guess' at when the bottom is. Its scary and the best thing is to concentrate on a limited number of stocks for the entire day so you can see trends develop. Everyone gets in, but are you preparing an exit plan? What is the trigger and what is the plan for the escape? If you are paper trading, it doesn't matter, but at least learn from mistakes. Today was a very strong downtrend, but the only options I would enter long would be those that had at least a 'event driven' reason or chart pattern that would justify entry. Whether wrong or right at least you traded and not gambled. The VRTS chart was a horror but note the best triggers were in the first and second reversal session. Even if you were stopped out in the first, you quickly reorganized and knew to go short in the second. by 11:30, the doldrum period everything was pointing one way: down. Staying in puts or short positions ON SELECT stocks was the way to fly.. but having one or two longs that were bucking the trend was also okay. Hopefully we won't (I like them though) have days like today too much longer. But prepare for them like for a hurricane, have you exit plans working. Last thing don't assume chart patterns that look great the night before at point to a continuing uptrend will in fact go in that direction. "Indicator Envy" is something that every trader goes through. Believing every indicator and chart pattern, when actually a bearish pattern can be bullish the next day and vice versa. Don't follow too many indicators and take these 'reversals' in charts with a grain of salt. If all our scans turned out great than we'd all be rich. That is not the case. One of my favorite chartists in this month's Technical Analysis of Stocks and Commodities Magazine, Mr. Gary Smith says... even a fourth grader can read a chart but only certain people that become traders.