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

To: CommanderCricket who wrote (2856)	3/18/2005 9:21:51 AM
From: chowder	Read Replies (1) \| Respond to of 13449

CC, yes there is a risk but it's important to understand when a hot sector is in the process of falling off. It was evident with the homeboys. They were a hot sector too and look what's happened to them. When price breaks below the 50 day moving average, that does significant technical damage to any stock or sector. I'm not going to jump the gun and assume KCS will pull back but if it sets a lower low from the last time it dipped below the 50, the trend is breaking down. Now, the 50 day moving average may hold, but let's take it a step further. Money flows are negative. ADX is showing the red line above the green line. This is saying that the trend is weakening. KCS needs to move here and now. If it doesn't, all indicators are suggesting any move below the 50 dma will be the real deal. Look at the weakness it showed yesterday. It had a nice gap up at the open and could not build on those gains. That tells me supply is coming to market. Maybe demand can offset that supply. We'll know in the next day or two. stockcharts.com[h,a]daclyiay[d20041218,20050318][pb50!b20!f][vc60][iut!Lc20!Ll14]&pref=G dabum

To: CommanderCricket who wrote (2856)	3/18/2005 9:29:12 AM
From: chowder	Respond to of 13449

>>> How do you manage that risk or do you even look for it? <<< I forgot to answer this question. Keep in mind, the short position was triggered when KCS dropped below the 50 day moving average. That is always your first clue of a change in trend. The price happened to pull back after the trade triggered and the price closed above the 50 dma. You manage that risk by using close stops. You recognize that if the price moves back up above the 50 dma that it is bullish for the stock. If the price dips below the 50 again, odds are you are going to see lower prices and KCS moves down to the 200. The key is the price reaction to the 50 dma. dabum