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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Robert Graham who wrote (4216)	12/18/1997 3:32:00 AM
From: Chris	Respond to of 42787

watch the naz 200 day ema... red light from my mkt system... selection of stocks is key... radaf is on my list.. that's it.. great earnings released today.. going to bed. back from LV..

To: Robert Graham who wrote (4216)	12/21/1997 3:33:00 PM
From: James F. Hopkins	Respond to of 42787

Bob; Trying to TA the DOW, is not wise..as with any basket, but the DJI is the worst I'v found..it's the way the index is set up. IE some low volume stocks may move the index up, while at the same time most of them are selling off..every stock in the dow has the same effect on the price of the dow..hence any one one that moves x can change the dow the same amount..a smaller cap may move up say 5pts and it's volume not near what say GE, or KO would run on a normal day, but that same 5pt move up on low voulme, can mask or even make the DOW look up at the same time a broad sell off of bigger ones on much more volume is going on. The Dow is not weighted in the normal sence. Each issue in it represents 3.9875637 shares ( at this time ) regardless of price or market cap. Any move by any stock can x times .2507797 = the amount the index will change..this often creates a misleading indicator as to if the market is really up or down..the only way to track the Dow..is to create your own index..TWO of them..but weight them..via price.. and via market cap..then watch for a divergence in the Regular index vs yours..the regular one will move towards that divergence, if it get very large..( using market cap weighting ).. Look at the individul issues..back prior to the OCT 27th fall off..you will see the DOW was artifically high many issues had sold off greatly off prior to that date..on the 27th the index droped like a rock but was mostly correcting itself, the drop paniced others to sell..and was over done. The index at this time has not come back up to the market cap level IE the divergence is the opposit this time, we have more market cap, by 687 Billion in the dow..than we did on OCT 24th just prior to the sell off..so with the dow at the same level..and volume about the same..we have a whole different situation..this time the pressure is up..look for it to rise in Jan. Jim Keep in mind charting a basket of stocks to apply TA, almost always introduces volume errors no matter how you weight them.. TA via charting is limited to single issues. ALSO it is not of much use on stocks under $10 particularly on the NAZ..& were you see larger bid/ask spreads most of them are under the market makers controal..a few shares can be sold at the high and low of the day..and closed out or opened in a way that is ment to fool and suck in buyers. some interday charts over several days will often show that the majority or volume of stock sold during the day was above or below.. what the real moving average would be..IE a stock looks like it's moved above or below it's moving avg..but the majority of shares traded just the oppisite..this mostly happens on cheap NAZ stocks. Normal TA can not relied on if used on them. ------------------------- Jim