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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Ed Ajootian who wrote (20201)	3/13/2003 4:57:41 PM
From: chowder	Read Replies (2) \| Respond to of 206131

>>> The E&P business is a risky one and shit can happen even to the best-run company. <<< Ed, so true! In addition to drilling risks, we have to worry about profit takings risks. In an attempt to show how technical analysis can help one save profits, please allow me to use CRK as an example of how to do this. I'm not attempting to pick on anyone's selection, but the chart is providing a very good example of a profit taking opportunity. The first indicator I look at is the Stochastic. It let's me know when a stock is overbought or oversold. Anything over 80 is overbought, anything under 20 is oversold. This indicator by itself doesn't cause me to react, it merely gives me a starting point to look for buying or selling opportunities. Currently CRK is overbought. (Red Flag #1) This is where profit taking will occur if more buying doesn't show up. The next thing I look at is the volume patterns. On the chart, I use red for selling volume, black for buying volume. A 60 day time frame is used to get average volume. CRK has seen well above average volume over the past several trading sessions. Simply put, large amounts of volume should take prices higher. In the case of CRK, with all of its volume of late, it can't break above 10.54. (Red Flag #2) If we can't break out to a new high on this kind of volume, with the weather and inventory numbers we've seen, what's it going to take? The next indicator I look at is the histogram. Those blue bars should be rising when price does, falling when the price is heading down. The histogram is showing a divergence. The price is at a recent high, yet the histogram is falling. (Red Flag #3) Divergences are one of the most important indicators to those who use technical analysis. They are usually very good leading indicators of what to expect. The last indicator is the MACD indicator which measures the trend and also looks for those divergences. That's what the D stands for. The black line crossing below the blue line will indicate the trend is about to turn. Also look at the histogram, represented by the blue bars. It's getting ready to drop below zero, which is bearish. This isn't something you'd expect to see in an uptrending stock. (Red Flag #4) stockcharts.com[h,a]daclyiay[pb50!b200!f][vc60][iut!Uh14,3!Lah12,26,9!La5,17,9]&pref=G These aren't sell signals mind you, merely warnings to let you know you need to mentally prepare a point where you protect profits without giving up too much. The weekly chart actually looks good at this point and it should. All we're seeing currently are divergences, we haven't seen the follow through in price yet. Now, if CRK breaks above 10.54 on above average volume, this is actually a buy signal short term, in my opinion, since it will be supported by the weekly chart. But, if we don't see that break through, we've seen 4 red flags warning us that a top was in. Now, let's see how she runs. dabum