To: Scott H. Davis who wrote (204 ) 1/14/1998 9:18:00 PM From: ftth Read Replies (1) | Respond to
Scott: It's kind of a mixed signal, i.e. perhaps a turning point near-term (remember, we're not exactly in a raging bull market--profit taking is the dominant force). It gapped up at the open, immediately sold off to its lows of the day, recovered and held steady, then sold off abruptly to the lows and held. It closed near the bottom of the range, which is bearish, but the gap up held through the close, which is a positive. It had very high volume on a day which closed in the bottom of its range though, indicating distribution was the dominant force. When you get distribution signs on good news, especially after a strong short term run, it's generally an indication that the bears are taking control, at least for the short term. Don't take this wrong--it's meant with good intentions--but it sounds like you're arguing with the market. The market is never wrong! People's opinions of the market, though, are often wrong. The true facts of what the market believes are right there in the chart. It's showing the forces of supply and demand at work, and the stronger hands control the price. It sounds like you're trying to rationalize away today's price action because it doesn't make sense. You made the statement <<Unless you folow this company, you would have thought it had a bearish day looking at the candlestick.>> The stock didn't react in the way that logically made sense to you, which should always cause yellow lights to flash. A trader would bail on these signs. If you're in it for the long haul, 1 day reactions shouldn't cause you to loose any sleep. But you can't be both! You have to decide which camp you're in an make decisions based on that. Otherwise, you're gonna drive yourself nuts with frustration because the market's timeframe isn't matching yours. I can only make comments based on the way it seems you're reacting. My interpretation of your reaction could be completely wrong, but at least give it some thought.
