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To: irv_mermelstein who wrote (8)	10/27/2000 6:55:56 PM
From: ig	Respond to of 15

I don't buy O'Neill's 7-8% stop-loss rule. While other parts of his method are somewhat complicated, this part seems like just a very broad rule-of-thumb, probably aimed at keeping unsophisticated traders from going broke. There are additional parts of his method that seem awfully fuzzy to me. One of them is his way of calling market bottoms. (You take this up in another post, and I agree with your take.) Another fundamental but dubious element of his method -- and this one REALLY gets me -- is his so-called "cup-and-handle" pattern. As a friend of mine said, the first time he reviewed this idea: "If THAT looks like a cup-and-handle, I'm a gazelle!" But the persuasive aspect of his method, for me, has to do with his focus on new market/sector/group leaders with flourish fundamentals. This just makes sense to me. Right now, I am looking for: 1. NEW LEADERS: A company with a new product or service for which there is a great new demand. 2. SUPPLY/DEMAND: Maximum of 50M shrs outstanding, so that when the demand comes, the supply of shares is not so great as with a mature company. Forget about mature companies like the Intels and Ciscos, I want the NEXT Intel and Cisco! 3. FLOURISHING FUNDAMENTALS: I am believing what O'Neill says about the condition of companies' earnings, sales, and margin just prior to their strongest price moves. I am not so sure about his TA. His talk about cups and handles and "bases" and such -- well, it all seems very subjective. I intend to filter his ideas through my own recently acquired TA education. (More on this later, perhaps.) ig