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

To: Johnny Canuck who wrote (40568)	1/6/2004 1:18:52 PM
From: Johnny Canuck	Respond to of 69321

Poorly Timed Buy Can Turn Winning Stock Into Loser Tuesday January 6, 8:37 am ET By Craig Shaw Investor's Business Daily Timing is everything when it comes to buying breakouts. Hesitate too long, and the stock you've tracked diligently fo,r months may climb well out of range. For the best shot at profits, try to buy exactly at a stock's pivot point. That way you won't risk being shaken out on normal pullbacks or corrections. What's the pivot? It's the last point of resistance in a basing pattern. In a cup-with-handle base, it's 0.10 above the high mark of the handle. In a double bottom, it's 0.10 a,bove the midpoint of the W. When a stock clears this hurdle on heavy trade, it means institutional buyers are building positions. Following in their footsteps is your best bet as an investor. It's tempting to jump aboard a stock several days after its breakout. Don't risk it. A stock that's surged 5% or more past its pivot is labeled extended, or off-limits. , Why is this important? Because many breakouts pull back near their pivots before taking off. Loss-cutting rules mean you need to ditch a stock that falls 7%-8% from your buy point. A correction could leave you staring at a quick loss instead of a chance at a hearty profit. Usana Health Sciences launched out of a nine-week base on Sept. 17 (Point 1). The maker of nutritional supplements a,nd personal care products boasted burgeoning fundamentals. Profit had risen by triple digits for six straight quarters. Year-over-year sales growth accelerated from 4% to 47% during that stretch. Its EPS Rating was 83, its RS Rating 97. The stock's pivot point was 22.92, or 0.10 above the high of its nine-day handle. It closed its breakout session just 2.4% above that mark, well within buying range. , What if you hesitated at the breakout, then tried to buy the next day? The stock kept climbing, closing the Sept. 18 session 6.7% above its pivot (Point 2). That's out of range. The stock's action the next two days showed why (Point 3). If you bought right at the pivot, the pullback on lighter t,rade didn't worry you. But if you bought at the extended second-day close, you suffered a 10% loss. If you were following loss-cutting rules, you'd have to dump the stock. Usana rallied back the next two days. If you tried to jump in then, too late. You'd have been shaken out as the stock corrected a sharp 19% (Point 4). If you bought at the pivot, you were safe again - and richer. The stock ran up 72% from its pivot in less than two months. ,