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Strategies & Market Trends : Roger's 1997 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Jon Tara who wrote (6159)	10/28/1997 1:17:00 AM
From: Jon Tara	Respond to of 9285

I'd like to explain why I think that "half-way between the 50ma and 200ma" is just an advantageous place to short here. At first thought, that would seem a very bad place - a great deal of uncertainty - will it drop, or will it go back up? It would seem to be the point where the least can be said about where the price might go. But in this context (as well as in the context of gap reversals) I feel that this is the point of LEAST risk. I like to think of it like a spring-loaded door - once the door is half-closed, you can predict pretty-well what is going to happen. A caveat - in both cases, this has to be supported by the sector or the market. That is, there have to be a lot of stocks that are acting similarly. We are making use of inefficiencies in the market that make different stocks react slightly out of sync with each other. So, the fact that a stock has fallen below it's 50ma and is 1/2 way toward the 200ma means nothing unless it is supported by other stocks in the sector which have done so and then moved to the 200ma. I have seen this again and again, on both the upside and downside - when a stock gets 1/2 of the distance between the 50 and 200 ma, or 1/2 way back through and old gap, it is more likely than not that it is going to follow-through the rest of the way.