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

To: chowder who wrote (12366)	5/5/2007 2:31:24 PM
From: chowder	Respond to of 13449

FOOD FOR THOUGHT ... Riding the Trend ...................... If you are trading the broader markets or simply trading a specific sector, keep in mind that 70% of a price's up move occurs in a 30% time frame. In other words, price usually consolidates or stays in a trading range most of the time. When price breaks out, price usually moves very quickly. And when it moves out, you not only want to be on board, but stay on board for most of the ride. Stan Weinstein calls this a Stage 2 price move in his book, "Secrets For Profiting in Bull and Bear Markets." The novice trader doesn't usually get on board for a Stage 2 uptrend because the move doesn't start until price breaks out to a new high. The novice thinks price is extended or overbought. They won't buy at this point. The novice doesn't realize that break outs are professionally driven. When price is professionally driven, it moves more quickly because professional and institutional traders buy larger positions which increases demand. This increased demand drives price more quickly because it is not being offset by overhead supply. Overhead supply represents those who bought at higher prices, are holding a losing position and praying for price to come back up to their entry point so they can sell. Without this overhead supply at break out points, it's this market environment that creates the Stage 2 uptrend, the point where 70% of a price's up move occurs in a 30% time frame. In recent weeks, I have read on various message boards where a lot of people have gone to cash. They are being driven by fear. They are afraid the market is due for a correction and are unable to recognize what is going on in the market. If they were to look at supply vs. demand, they would see how strong the market environment is. When you look at a chart (any chart), look at the volume patterns. Look at the above average volume days (weeks). Are they showing more up days (weeks) than down days (weeks)? What is the percentage of above average up days (weeks) vs. above average down days (weeks)? When you see a large percentage of above average up days (weeks), you know the move is being professionally driven and you stay invested. In looking at the chart of the DOW, going back to September, we have 18 weeks that show above average buying volume and only 6 weeks of above average selling volume weeks. That's a 3-1 ratio in favor of the bulls. That's a recipe for higher prices. Eventually the trend will come to an end. So, you simply look at the price chart and determine your areas of support. You look at the various levels and you sell out of your position 1/3 at a time. The 3 areas of price support on the weekly chart are 12,800 ... 12,050 ... and the break out point at 11,700. These support areas are assuming an intermediate to long term view. The bottom line is, if you've entered the stock properly and you've caught the upside price move, you should benefit by letting your profits run. Don't allow fear to let you miss a Stage 2 uptrend. The whole purpose of identifying low risk, high probability entries is to benefit from a Stage 2 move. Just some food for thought. (THIS MESSAGE IS LINKED TO OTHER FOOD FOR THOUGHT RANTS.)