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Technology Stocks : The New QLogic (ANCR) -- Ignore unavailable to you. Want to Upgrade?

To: Craig Stevenson who wrote (13979)	1/29/1998 5:16:00 PM
From: Kerry Lee	Respond to of 29386

Craig you wrote: <<Disclaimer: I do not consider myself a technical analyst. I am in the early stages of learning this area. Do not take this as investment advice without doing your own due diligence. It is just a new tool I use to help me make investment decisions.>> Craig, I am not a TA expert either. Craig or any other lurking TA experts, could you please do me a favor and post your TA thoughts on the following stocks in terms of support and resistance levels in the near term . I am trying to decide whether to buy , hold or take profits based on technicals. I currently hold positions in the first 2 stocks and am monitoring #3 - #5 for possible entry points: 1. Aeroflex - ARX 2. Transwitch - TXCC 3. TCI Corp - TCSI 4. Int'l Mgfr Services - IMSX 5. Logility - LGTY Feel free to: a) post your TA responses here b) post on the appropriate SI folders for these companies or c) send private e-mail. If people are stuck for time and can only do a couple, my personal request would be to focus on the first 2 ( ARX and TXCC ) . Thanks. Note that I am NOT recommending any of the above to anyone and my knowledge/research on these is minimal. These are all what I consider to be relatively cheap, illiquid and speculative small caps for only the most aggressive investors .

To: Craig Stevenson who wrote (13979)	1/30/1998 3:28:00 PM
From: Alan Aronoff	Read Replies (1) \| Respond to of 29386

Hi Craig, Regarding moving averages. You got me to open up my favorite TA reference book "Trading For a Living" by Dr. Alexander Elder. It was recommended to me by a guy who goes under the name Rev Shark. Back in the good ol' days at the Fool on AOL, Rev became the leader of the cult hit "short term trading folder." It attracted increasing interest rapidly with posts reaching into the hundereds a day. I recall some marvelous exchanges between Rev Shark representing "the traders" vs. MF Templar representing the "buy and holders" disussing the merits of the folder and its disciples. Things eventually became so contentious that Rev started his own site on AOL for traders which featured the Shark Tank... realtime trader chat. I hardly ever log on to AOL anymore but I believe the tank is still full of sharks looking for fresh fish <g>. A few quotes on the subject from Dr. Elder... << Wall Street old-timers claim that moving averages were brought to the financial markets by antiaircraft gunners.They used moving averages to site guns on enemy planes during World War II and applied this methos to prices.>> <<Each price is a snapshot of the current mass consensus of value. A single price does not tell you whether the crowd is bullish or bearish -- just as a single photo does not tell you whether a person is an optimist or pessimist. If, on the other hand, someone brings ten photos of a person to a lab and gets a composite picture, it will reveal that person's typical features. If you update a composite photo each day, you can monitor trends in that person's mood. A moving average is a composite photograph of the market -- it combines prices for several days. The market consists of huge crowds, and a moving average identifies the direction of mass movement. The most important message of a moving average is the direction of its slope. When it rises, it shows that the crowd is becoming more optimistic -- bullish. When it falls, it shows that the crowd is becoming more pessimistic -- bearish. When the crowd is more bullish than before, prices rise above a moving average. When the crowd is more bearish than before, prices fall below a moving average.>> << An exponential moving average (EMA) is a better trend-following tool than a simple MA. It gives greater weight to the latest data and responds to changes faster than a simple MA. At the same time, an EMA does not jump in response to old data... An EMA has two major advantages over a simple MA. First, it assigns greater weight to the last trading day. The latest mood of the crowd is more important. In a 10-day EMA, the last closing price is responsible for 18 percent of EMA value, while in a a simple MA all days are equal. Second, EMA does not drop old data the way a simple MA does. Old data slowly fades away, like a mood of the past lingering in a composite photo.>> << When computers first became available, traders crunched numbers to find the "best" moving average for different markets. They found which MAs worked in the past -- but it did not help them trade because markets kept changing. Our brokers do not let us trade the past. It pays to tie EMA length to a cycle if you can find it. A moving average should be half the length of the dominant market cycle. if you find a 22-day cycle, use an 11-day moving average... Trouble is, cycles keep changing their length and disappearing... Traders can fall back on a simple rule of tumb: The longer the trend you are trying to catch, the longer the moving average you need... A 200-day moving average works for long-term stock invetsors who want to ride major trends. Most traders can use an EMA between 10 and 20 days.>> <<1. When an EMA rises, trade that market from the long side. Buy when the prices dip near or slightly below the moving average. Once you are long, place a protective stop below the latest minor low and move the stop to the break-even point as soon as prices close above their EMA. 2. When the EMA falls, trade that market from the short side. Sell short when prices rally toward or slightly above the EMA, and place a protective stop above the latets minor high. Lower that stop to the break-even point as soon as prices close below their EMA. 3. When the EMA goes flat and only wiggles a little, it identifies an aimless, trendless market. Do not trade using a trend-following method.>> <<Moving average serve as support and resistance zones. A rising MA tends to serve as a floor below prices, and a falling MA serves a ceiling above them. That's why it pays to buy near a rising MA, and sell short near a falling MA.>> ********************************* I have been using simple MAs with ANCR because I believe 50 and 200 simple DMAs are heavily watched and consequently become self fufilling prophecies. From May 96 through Jan 97, the 200 DMA was incredibly accurate at showing ANCR's support levels. ANCR traded above the MA during this entire period except for brief one day/intraday moments until Jan 15 when ANCR clearly closed well below it at $13 1/16...fresh fish sensor screaming. Less than two weeks later, Ancor announces the loss of the Sequent contract...stinky fish. Starting with the rally in May 97, I have found a combination of the 30, 50 and 200 simple DMAs to be very useful. Rereading Dr. Elder's remarks has given me some motivation to explore using EMAs and shorter periods with ANCR although I do use MACD (moving average convergence-divergence) which is an oscillator based on the point spread difference between two exponential moving averages of the closing price. I think the key is to find whatever MAs fit the chart of a certain stock and use them until they appear not to be meaningful anymore. I know, easier said than done. <g> Quoting you Craig... <<Disclaimer: I do not consider myself a technical analyst. I am in the early stages of learning this area. Do not take this as investment advice without doing your own due diligence. It is just a new tool I use to help me make investment decisions.>> Me too