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Strategies & Market Trends : The 56 Point TA; Charts With an Attitude -- Ignore unavailable to you. Want to Upgrade?

To: Doug R who wrote (10401)	1/11/1998 12:22:00 PM
From: ivan solotaroff	Respond to of 79243

Doug, Re: premature exits from slow-leaping cats: You may be missing the obvious when you say: "So far, all I have come up with is the one or two (depending on your antacid supply) ticks below the signal day low [here, Doug, I have to presume you meant signal day HIGH] as a defense during the first 3 post-signal days." The "obvious" here is: As the holder of a post-signal dead cat who is still in a profit situation after two or three days, I really have no reason to sell, regardless of whether the stock is currently lower than the high of the day on which I bought it. I didn't BUY it at that high. There is no reason to exit at all, unless I am afraid of a gap, which may not be an unreasonable fear. My concern with the analysis being done with SGI, and the root cause of much of my disagreement with Esteban, is that SGI is not a true PGDCEB: It gapped 22%, which by my pocket calculator is (8 divided by 30) 26% less than THE BARE MINIMUM. That sucks. Esteban says we should consider the likes of ORCL because it strictly obeyed the rules for a signal day, and on Friday you came within a tick or two of agreeing. But this is MADNESS! Now if we're seeing a signal in ORCL because the rules say BUY, why is a stock that fails a rule by 26% being admitted for serious study. Down the road, this can only lead to serious error. We cannot claim to be felinologists if our method isn't scientific. "After those three days, the daily trendline exit seems optimal." Following the daily trendline would have lost you mucho percentagia with SGI, TSEMF, and OXHP on the way up. I'm not arguing with it as a consideration for study, but the three examples just given rule out inclusion of the word "optimal" in any sentence applied to the daily trendline exit. Which brings me to: After much contemplation of dead cat charts (I print them up, enlarge them on a sophisticated Xerox machine here at work, and hang them high on my cubicle on weekends when no one's here with the butterfly net to take me away), I have decided, for the moment, to pay more attention to DOWNtrends than UPtrends: After weeks of looking at these charts, I finally did my best piece of analysis, which consists of one word: DOH. These are stocks on the way down. Sure, I'm looking to play a bounce, but the overwhelming entelechy (very, very cool to be able to use that word in proper context) of these stocks is ... DOWN. Broken downtrends are initial buy signals; initial sells come when downtrends regain their rule. Maybe ... Ivan

To: Doug R who wrote (10401)	1/11/1998 12:30:00 PM
From: Esteban	Respond to of 79243

Good morning Doug, great post! You're right about the 12/15 SGI not being a signal day. 12/18 is the day I have recorded. My mistake, but I still think any bounce in the felines whether it begins with a signal day or not can be looked at from the point of view of what forbodes another decline. OCAD on 12/29 was not a signal day. Volume requirement not met. I don't think OCAD has had one yet unless you think there could be a case made for designating the 30th as a signal day given the low is equal to the "new low" 29th with volume confirmation. That might make things a bit messy down the road but I'm willing to consider anything (before I toss it out the window >>ggg<<). As you and Ivan have both pointed out, 12/29 OCAD is not a signal day having only exceeded the volume of the previous 2 days and not 3. It's so great having folks checking your work on these signals. I can't believe how often I can misread or overlook one of the three simple rules. That's the great advantage of posting perceived signals here before trading them. You get sent to the corner to think about your error without suffering the consequences of it. As far as variation on the signal goes, the idea is promising, but with the cattery bursting at the seams, I think we can better spend out time learning to effectively trade the signals as already established. Besides, one of the members of our cat family just might discreetly object to this lowering of the standards. <g> I've already voiced my reservations about using the daily accelerating trendlines as being an automatic out if the cat really moves. (Like we want it to.) It's great for simplicity, not doubt about it, but you'll never get a 100%er, and just a little more leniency might keep you in a stock that really hasn't even slowed down. I'll continue to track the exit methods we've come up with unless we consider one or more to be ineffective. I think what comes out of it all is that getting in on the signal day is getting in at the bottom. A rare feat. I wouldn't be too concerned with getting out at the top, just with making a high percentage of successful trades. 4 to 10 days to lock in 10 to 20% per signal is pretty lucrative. Very well stated, and a lofty goal. Esteban

To: Doug R who wrote (10401)	1/11/1998 12:48:00 PM
From: Esteban	Read Replies (2) \| Respond to of 79243

Doug, Re:I'm ready to focus on impending signal days and work the trade for what the trendline or the stoploss gives and treat it by the book. It's more businesslike that way IMO. So I have it clear and can report accurately on your method for trading PGDCEB signals, let me summarize my understanding of you exit points. 1) If the stock price falls to a point below the low of the signal day at any point in time after the signal, you sell. 2) If 1 above does not occurr within the first 3 post signal days, you will draw the steepest possible trendline that connects 2 or more daily lows and sell upon the break of this line, even intraday. Is the method? Do you still like the BB and RSI method? Ivan. What is your exit method, purrxactly? Esteban