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Strategies & Market Trends : Strictly Buy and Sell Set Ups -- Ignore unavailable to you. Want to Upgrade?

To: Larry S. who wrote (1924)	1/22/2005 11:08:16 AM
From: Larry S.	Respond to of 13449

Teco symbol is TE, sorry. eom

To: Larry S. who wrote (1924)	1/22/2005 9:44:39 PM
From: chowder	Read Replies (1) \| Respond to of 13449

Larry, Since I know you are a long term buy and hold type of person, I'm going to assume that the fundamentals for this company are very good. I have no idea that they are or not but, I don't see you buying a company unless they are. Since I look for trades with a holding period of 1 to 5 days, TE would not be a buy yet. It is setting up for one of the buy strategies that I use but it needs another day or two to qualify for what I call a swing trade. The set up includes a rising 20 and 50 day moving averages with a nice separation between the two. The 20 and 50 day moving averages should look like rail road tracks heading in a northeasterly direction. TE qualifies with this criteria. Next, the price must be pulling back off a recent high and TE is doing this also. The next step is a 3-5 bar drop into support at the 20 day moving average. We are close here. We have a 2 bar drop and another down day like Friday should take it right down to support. The final step is the price must trade 6 to 12 cents ABOVE the high of the final down bar in the set up. stockcharts.com[h,a]daclyiay[pb50!b20!f][vc60][iut!Lah10,30,5!Lc20]&pref=G That's it. It's that simple! Having the patience to wait for the set up is the hard part and selling it quickly if the pattern breaks down. However, since you are a long term kind of guy, TA needs to offer you something else if it's going to help you improve your results over the long term. (I'm not suggesting your results are poor, I'm suggesting another way to time your entries for longer term holdings.) When people use fundamental analysis in their decision making, they look at the balance sheet, PE ratios, earnings growth, the sector the stock is in, price to sales ratios and a number of other things that I have long forgotten. They take this criteria and do two things to help them in their decision making process. One is to find a reason WHY a stock's price will rise, and the other thing is to come up with what they think is a good value to pay for the stock. The technical analyst isn't concerned with "why." The technical analyst is concerned with WHEN. When will the price rise, not why? The technical analyst looks at supply and demand in the price movement. The technical analyst determines supply and demand levels through support and resistance levels. Support is where the market determines the stock's true price value. Resistance is where the market determines the price is over-valued. It is in this light that most people don't understand technical analysis and a lot of those who use it, don't use it properly. TA isn't a tool to predict future price movement based on past results, as most people assume it does. TA, if used properly, is supposed to help you do a better job of forecasting the time frame in which you choose to trade. Like the weatherman that uses certain tools to forecast the weather in the coming week, he isn't always correct. He looks at the information his tools provide and tries to come up with an educated guess on future weather patterns. This is what a good technical analyst does. You look at the charts and determine where levels of supply or demand should come to market. If the stock is in an uptrend, you look at support levels and determine if demand picked up each time a support level came into play. In determining a sell opportunity, you look at resistance levels and determine is demand dried up and supply came back into the market. To the technical analyst, the most important thing is when to buy and when to sell. The time to buy is when demand is picking up. The time to sell is when supply is coming to market. If you buy at support, a level where demand should pick up, and the price continues to fall, you know immediately that your forecast was incorrect and you correct the situation immediately. No harm, no foul. Most of the stocks in the portfolio are bought off levels of support and when support doesn't hold, the stock is sold immediately. Since you are a long term holder, your levels of support and resistance should come from the longer term charts. If I were looking for a longer term hold, and I was looking at a weekly chart, I would not be buying here. The trade would be either too early or too late. The price has reached a long term price resistance level from Jan. 03 and Feb. 04. This is where supply should be coming to market. The price had significant pull backs the last two times it hit this price level. That doesn't mean the price won't continue to rise. It means it's a high risk trade until it either breaks out to a new high on strong volume or pulls back to a price support level where demand should pick up. The candlestick pattern for last week is a "potential" bearish candle. It needs confirmation though. Confirmation would be a down week in the coming week. The technical analyst would look for clues to better provide an accurate forecast. As the price has risen over the last few weeks, volume has been declining. This isn't the type of volume one would expect to see if prices were going to break out to new highs. It must pick up. In looking at the weekly chart, the MACD indicator has been declining at a time when price was rising. This is a divergence and doesn't support the higher price. As price rises, you like to see the fuel cells in the MACD rising. This weakness in the chart is confirming the weakness in the price over the past week. Again, it's not saying the price won't break out and head higher. It's saying to wait for a better low risk entry opportunity. That opportunity is on the break out or waiting to pull back to a price support level. stockcharts.com[h,a]waclyiay[pb40!b20!f][vc60][iut!Lah10,30,5!Lc20]&pref=G All in my opinion, of course. dabum