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

To: CommanderCricket who wrote (2831)	3/16/2005 9:43:03 PM
From: chowder	Respond to of 13449

>>> Why short a stock in an uptrend, boucing off of support, with strong fundalmentals in a leading market segment (E&P's). Did I miss a day of class? Risk versus reward? Seems very dangerous to me <<< First the reward vs risk. It's a low risk trade from the standpoint the most I lose is 35 cents or 2.2% on the trade. That's where my stop is set. The reward, if the trade works out is that a breach of the 50 often sees the price drop to the 200. That's a target of $1.95. The risk vs reward is very good. Your argument may be the probability of that happening. As I have already said, the probability was based on KCS dropping below the 50 before that play could develop. It held on today, barely. We'll see where it goes from here but again, the risk is only a loss of 2.2%. Now, let's talk about probability. In my opinion, and I could be wrong, money flows are often an indicator of future price action. If you look at the money flows of KCS, they are dropping off the chart. I think KCS is on the brink of dropping below the 50 day moving average. When you see money flows that drop like this, it is very unusal for a stock to immediately turn around. It could form a base, might bounce for a day or two, could consolidate sideways but, these money flow patterns are horrendous. In the chart that follows, the middle window is volume. It shows volume below the 20 day moving average and now below the zero line. This is bearish. The bottom window is the money flow indicator. It is well below the 20 day moving average and well below the zero line. I know the weekly chart looks better but I think there is too much damage on the daily to immediately turn around. ttrader.com Again, I could be wrong, but you at least know my thought process here. The reward vs risk is good. It's the probability now that I'm waiting on. If it doesn't happen, I lose 2.2% on this trade. dabum