Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: cyesp who wrote (42112)	4/17/2005 7:29:47 PM
From: chowder	Read Replies (2) \| Respond to of 206338

Cy, thanks for your detailed analysis. I appreciate it. Tell your wife I said she's welcome and that I'm happy I am able to help others become better profit takers. I can see why you might want to play most of the picks you mentioned, I was really only questioning the purchase of UPL on weakness. You may be right. It very well could turn up Monday and head higher. None of us can predict the future and we place our money based on our belief systems. I hope you don't mind me sharing what I see in this trade. I'm not being critical and I'm not second guessing. I'm merely sharing another perspective for what it's worth and it might be helpful to others. Since the objective with the UPL trade is to hold for a year or more, there are certain criteria I think are essential if we are to make a "high probability" trade at the current price level. For price to head higher, we would need to see buying volume and positive money flows. It would be nearly impossible for UPL to hit $55 per share without those two ingredients. So let's take a look at money stream and volume. Before we do though, you mentioned the trend. An uptrend is where price sets a series of higher highs and higher lows. Each pull back needs to set a higher low than the prior pull back. Each rally must set a higher high than the high of the previous rally. The 20 week moving average needs to be above the 40 week moving average, with a comfortable distance between the two. Both of these averages should be heading in a north easterly direction and price needs to be above them. When we look at the longer term chart, the weekly, we see that the 20 week moving average is no longer rising. We also see that price has now set a lower low than the previous pull back and is now below both moving averages. Price is no longer in an uptrend. Let's move on to the volume indicator. In the middle window, you will see an indicator called TSV31 (a white line) tracked along a 20 week moving average (dotted blue line). TSV stands for time segmented volume. I'm using a 31 day period for time segments to provide me with a longer term view of volume patterns. When TSV is below the moving average, it usually has a bearish bias but when the volume indicator drops below the zero line, this is very bearish. Volume is below the 20 week moving average and has dropped below the zero line. The volume showing up for UPL at this time is selling volume. The current environment isn't favorable for one of the conditions we need to see for price to rise and that's buying volume. We have far more selling volume than buying volume. The lower window shows an indicator labeled MS for money stream and also tracked with a 20 week moving average. Money stream is well below the moving average and well below the zero line. This is not an environment that is conducive for a high probability trade. Notice how on the other pull backs, even though money stream at time fell below the moving average, you didn't see a steep drop below the zero line. That's what makes this pull back different from those in the past year. This is showing institutional selling and when you see institutional selling like this, they don't usually reload immediately. I suppose they could but it isn't a high probability event. ttrader.com If you want to see a very nice analysis on how time segmented volume and money stream works, try this link. The presentation is on the Q's but you will see how these indicators are used to judge the quality of price movement. worden.com But again, I'm not saying UPL can't rise from here. What I'm saying is there must be certain conditions present in order for UPL to reverse and head higher. My style of trading calls for waiting for those conditions to start to show up, to put the odds in my favor, to have a higher probability of success. Just my perspective, I know others have objectives that are different from mine and that's cool. dabum