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Gold/Mining/Energy : Uranium Stocks -- Ignore unavailable to you. Want to Upgrade?

To: 7 Years who wrote (8758)	3/4/2007 4:33:54 PM
From: chowder	Respond to of 30090

Thanks for the kind words Ernest, I appreciate it. Weinstein is one of the books I think should be a must read for anyone trading the markets. (I define trading as anyone who expects to buy a stock and at some point trade it for a profit, regardless of how long they hold it. It can be one day or one decade. If they plan on selling at a profit, it's a trade from my point of view.) As I've said before, there are many ways to make money in the market. Many long and short term strategies have been designed and tested. The most effective strategy over time has been the trend following strategy. Futurestruth.com is in the business of testing strategies, they'll even test yours if you have one to test, and for a price. Futurestruth.com says trend analysis has been the most effective strategy over time. The traders who are on record as having the record performances use trend analysis. Gil Morales grew his personal account by over 3200% in an 18 month period. Christian Kacher, another trader, is on record as having a mind-boggling return of over 70,000% in a 4 1/2 year period. Both of these men use trend analysis. Both of these men actually worked for William O'Neil of Investor Business Daily fame and used the knowledge gained from IBD to base their investing strategies on. They buy strength. In fact, if one were to read any of the Market Wizard books, they would learn that nearly all of the most successful traders of our time use a system of trend analysis as described in every day's issue of Investor's Business Daily. The 4 stages of price movement as explained by Weinstein changed the way I look at trading and have made a remarkable difference in my returns. Stage 1 is the Basing Area. This is where a stock has actually been falling and comes into an area where it trades sideways for a while. It is during this stage that your moving averages stop falling and start to level out. A good basing period is 7 weeks or more. Breakouts on less than 7 weeks of basing are often false breakouts. Not always, but often. Stage 2 is the Advancing Stage. This is the stage where where the price starts advancing, the volume picks up and the moving averages start rising. This is the stage that captures most of the price movement. This is where my focus is on when I take a trade. This is where the U stocks popped up a couple of weeks ago. Stage 3 is the Top Area. This is where the upward movement peters out and the stock starts trading sideways again, or starts to show sharp and choppy movement. This stage is where the battle between buyers and sellers heats up again as both bulls and bears try to gain or maintain control. The moving averages will once again start leveling out. It is possible another Stage 2 can develop here but, if not Stage 4 comes into play. Stage 4. The Declining Phase. This is where the price starts falling. It's mostly the opposite of Stage 2 with the exception of volume. Stage 2 requires increasing volume to push prices higher, prices will often fall on lower volume. In this phase, your moving averages will all be falling. People who tell you that you can't time the market, don't understand the philosophy behind trend analysis. The Market Wizard books will confirm that the strategies used by the world's top traders is to buy strength, using trend analysis. If you find a stock that is breaking out on huge volume, it usually indicates that institutional money is driving price. Institutions aren't in the habit of buying tops. They will defend their level of price support by buying large quantities of shares. This usually drives price higher. When I identify what I think is institutional money entering a stock, I assume that an object in motion stays in motion. I will hop on board. I assume they aren't buying a top and price will head higher. Where the timing comes in, is when you are wrong. You thought you identified institutional buying and instead a bear trap was set. This is where the price starts higher and then reverses. Often times bear traps show up as bearish engulfing patterns on a weekly chart. In that case you must have the discipline to admit a mistake and exit the trade with a small loss. The link below will define a bearish engulfing pattern and provide examples. They will show daily patterns. I add more significance to the patterns when they show up on weekly charts. leavittbrothers.com A lot of people who buy using only fundamental analysis are missing a big part of successful trading. If one wants to profit consistently over time, in a bull or bear market, not only knowing why a stock should perform is important, but when. The when doesn't have to be today. The when could be in the next couple of weeks. If I were a day trader, then it would have to happen today, but I don't do a lot of day trading. I use a combination of time frames depending on where price is in regards to its trend. I do a lot of intermediate term trading and some long term trading, so I check the weekly and monthly charts for the stock's trend in those time frames. Understanding trend analysis is understanding at what stage of price movement you are entering the position. Understanding trend analysis is understanding when to take some profits and when to cut losses. dabum