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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (40371)	11/20/2003 12:01:16 PM
From: Johnny Canuck	Read Replies (1) \| Respond to of 71160

November 20, 2003 If You Are New To This Column, Read This Judging from my emails, it appears that there are some new readers to this column. WELCOME! (If you are a longer-term reader, you might want to skip or skim the next few paragraphs). Therefore, I thought now would be good time to (re) explain my approach. My style is momentum based swing trading. I look for patterns that have the potential for short-term gains with the potential of becoming a longer-term winner. I believe one of the truest stock markets adages is "the trend is your friend". However, this doesn't mean that I buy or sell short a stock just because it's trending. You're better off waiting for a correction and then some sort of sign that the trend is resuming. Said another way, I look for mostly for pullbacks (and pullback related patterns) and an entry. Setups don't exist in a vacuum though. Since a rising tide tends to lift all boats, the sector action and market itself should also agree with the stock's trend. Finally, I realize that all of these concepts are worthless without proper money and position management. This includes using protective stops, trailing stops and taking partial profits. This column reflects the "top down" approach described above. I first look at what occurred in the trading day in the indices. I compare this with short-term support/resistance and the longer-term trend. I also will usually point out if any of my patterns or market timing systems are triggering at this point. Sector action, when applicable, is discussed next. I then discuss a general game plan based on what I'm seeing in terms of market action, sector action and the setups I'm seeing in the stocks themselves. Finally, I usually show one or two stocks which reflect the above analysis. Also, on occasion, I'll show money management and position management learning examples based on stocks mentioned recently in this column. I have numerous articles and column archives, several forums, a book, a CD ROM, and a video that describe in detail all of the above. Check them out! I also personally answer each and every one of my emails (eventually!). So feel free to email me if you have any questions. Sincerely, Dave Landry Looking to the indices, on Wednesday, the Nasdaq chopped back and forth in early trading but managed to rally later in the day. This action has it closing well and puts it right at its 50-day moving average (the red line below). The S&P put in a somewhat similar performance. This action puts it back above its 50-day moving average. So what do we do? I'm still not crazy (some may argue that statement) about the overall action in the sectors. However, in the indices, Wednesday's reversal from an oversold condition is triggering numerous buy signals in the systems that I have created/follow. Although I'm not nuts (another point some would argue) about jumping in here, I think since the systems have an edge statistically (that the market will be higher within 3-7 days), it may be worth a shot. Considering the above, look for a buying opportunity in the index shares (vs. playing individual issues). Best of luck with your trading on Thursday!