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Strategies & Market Trends : Ask Vendit Off-Topic Questions -- Ignore unavailable to you. Want to Upgrade?

To: Jill who wrote (6867)	3/22/2005 2:53:12 AM
From: Walkingshadow	Respond to of 8752

Hi Jill, Dunno... I knew it was doing well this morning, but I didn't have time to do more than glance at it. I just found out it was up 11% or so today. One thing for sure---and this was one reason I held the position---the BBs were more contracted than any I have ever seen. There was barely enough room for a candle to get wedged in, much less a trend of any kind within the BBs:. 139.142.147.218 Re KKD: I think the charts are very clear. KKD is not oversold, it is overbought. stockcharts.com[w,a]daclyyay[dd][pb50!b100][vc60][iLg!Lp14,3,3]&pref=G 139.142.147.218 There are not yet clear technical sell signals in place, but that will occur before too long. The most important fact about these charts is that KKD is in a long-term downtrend. This began with professional selling that caused a big gap down about a year ago. That was followed very predictably by more selling, and a repetitive pattern of (1) rally into resistance (e.g., from downtrending moving averages and downsloping trendlines); (2) failure at resistance; and (3) subsequent test and failure at previous support. In other words, more downtrend. Why is there more selling? Two reasons: (1) there is little or no professional/institutional buying pressure (recent volume spikes were mo-mo traders), and retail buying and selling cannot sustain any trend; thus, by default, the path of least resistance is down; (2) professional traders are all over KKD on the short side. When they take up short positions, that creates selling pressure. When they cover their positions and take profits, that creates buying pressure, and you get a bit of relief rally. They can do this again and again because they know they can inflict more and more pain on retailers who are stuck holding shares, and these will be increasingly willing to give up the ghost as KKD moves even further down---how much pain can you withstand before you say, "Okay, okay, enough. I'm gonna cut my losses right here and go lick my wounds and cry in my beer!" ? KKD is a classic lesson that IMHO clearly illustrates the following: 1. After a professional gap down (i.e., huge volume), and the initiation of a new downtrend (failure at the 200 sma followed by a bear cross), a stock is dead, dead money for at least a year, more often several years, occasionally even a decade or more (e.g., the TOPIX). 2. Stocks in a downtrend should be shorted as they test and fail at resistance, particularly if they are overbought. 3. Taking long positions in a downtrending stock is a sucker's bet because most of the volatility in the stock is to the downside (i.e., the reverse of the situation with, say, AAPL). (yes, downtrending stocks can be traded long, provided you know what you are doing, are nimble, don't make a habit of it, and always use stops..... I am not saying that long positions should never be taken in downtrending stocks. But that said, it is not wise to concentrate on that sort of thing, particularly when there are so many stocks around that are in a strong uptrend----THE TREND IS YOUR FRIEND !!!!). I think you can see from the above and the charts that the conclusion with KKD is that this is an excellent time to be considering a short position, not a long position. Why? Because it is in a solid downtrend, and has rallied into resistance, and is overbought technically. Further, if I wanted to find a long position, KKD would be very very low on the list of possibilities. .... all IMHO, of course. T

To: Jill who wrote (6867)	3/24/2005 4:48:59 AM
From: Walkingshadow	Read Replies (3) \| Respond to of 8752

Hi Jill, FWIW, I'm short KKD here... the reasons: 139.142.147.218 139.142.147.218 stockcharts.com[w,a]daclyyay[dc][pb100!d20,2][vc60][iLg!Lyb20,2.0]&pref=G KKD has rallied too far too fast, and is now extremely overbought at the top rail of the regression channel and the BBs. Notice also the BBs have gotten extremely expanded, and will now tend to contract. Furthermore, KKD has rallied into resistance, and closed on the descending 100 sma (which is resistance). These features make KKD a relatively low risk short, IMHO. T

To: Jill who wrote (6867)	3/30/2005 6:48:53 PM
From: Walkingshadow	Read Replies (3) \| Respond to of 8752

Note KKD.... textbook perfect short. A miserably failing stock that rallied into resistance (I shorted it on 3/23). Message 21164201 Since then KKD has gone down 15% from the close that day ($9.15) to today's close ($7.75). stockcharts.com[h,a]daclyyay[db][pb50!b100][vc60]&pref=G NOTE: see how the volume peaked as KKD rallied into resistance? THAT is a very strong signal that indicates increasing selling pressure, NOT increasing buying pressure. That is exactly what you want to see in a short that is rallying into resistance, and that in large part accounts for the subsequent 15% drop in KKD. This is often misunderstood... people think it is increasing buying pressure, but it is just the opposite. The professionals are not johnny-come-lately types, they are already in and that is what drives the stock one way or another. They don't buy in just at the end of a rally, but at the beginning, and that's what creates the rally in the first place. The volume surge represents professional profit taking and/or taking up short positions, NOT professionals taking long positions. This is a very very important point, IMHO. T