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Strategies & Market Trends : Stochastics -- Ignore unavailable to you. Want to Upgrade?

To: Speed Racer who wrote (20)	1/22/1998 4:15:00 PM
From: Wayners	Read Replies (2) \| Respond to of 927

I would call PMSI a severe downtrend. Buying now would be going against the trend. What you are seeing is short covering (profit taking by short sellers) causing what is called a "dead cat bounce". Buying at the oversold point (correct) where the stochastics were at 0 would allow you to profit somewhat, but where you will really make money with this one is to SHORT PMSI as soon as its stochastics peaks, hopefully at 80 or above. Its kind of like gravity when you are talking about the trend. With stochastics really high at say 80 PLUS a downtrend the price is going to drop a lot farther than just getting say a high stochastic on a neutral or uptrend. Believe me, shorting this one on the next bounce will be far more profitable than buying where the stochastic is at zero. Probably by a factor of 3 or 4 to one. The trend also acts as an insurance policy to bring short term "noise" price movements back into line fairly quickly.