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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: LastShadow who wrote (5213)	2/6/1998 4:23:00 PM
From: LastShadow	Read Replies (2) \| Respond to of 120523

Chart Trendlines: Basic charting techniques are one of the fastest and useful indicators around - and all you need is a straightedge. Keep in mind that this is used usually only for daily charts, and not intraday (1, 5, or 15 minute charts). It works like this - stocks are rarely static, but trend up and down for a variety of reasons. Eiher print out or look at a daily chart online. Visually you should be able to tell if the stock is heading down or up for several days, weeks or months. If a stock is heading down, but yoiu want to know where it may be going, draw a line connecting the high for a time furthest back in time to the high closest to today. Make sure that you do not line through any spikes or highs in between your earliest and most recent high. An example would be to look at the daily chart for ASND - connect a line from the high of about Dec 5 to the high of the first of January. As the upturn in the first few days of Jan penetrates that line, we have a minor reversal - you never know if its a major reversal until it breaks some chart-specific thresholds (which I won't go into right now). Another example would be WDC - connect the highs from the end of Sept to also about the first of January. yes, there was a lot of intraday and few day action in between on both these, but this is a tool used to pick a reversing stock or determine if you should hold or sell given where its going. Now, to determine what the stock should stay above each day in order to remain in this reversal stage, you now connect the LOWs from the point of the reversal through the furthest low close to today, again without crossing any lows in between. That's all there is to it - you connect highs on the way down and lows on the way up, in a straight line. Days that break the trendline should get your attention if you are checking your stocks daily. Usually dramatic movements with volume occur before large jumps and large drops (the tricky part is figuring out which its going to do - and a good tool here is trade size - large block buys indicate accumulation by something other than traders - good sign. Whereas lots of small purchases should make you wary). On gapping stocks - up or down, you restart the trendline at the day after the gap. Using this general method, one can also determine what the stock needs to stay above for the next day by extending the line one or two days beyond the last tick. As long as the stock opens and closes above that extended line (which would make it slightly above today's number) then you are in somewhat safe ground. I say somewhat because you need to keep an eye on average volume - is it selling about as many shares as usual - if it starts to drop in volume, start looking at the size of the trades again. Conversely, if you line the highs on the way down, it will tell you what the trigger point for the next day needs to be to forewarn a possible reversal. Finally, if a stock surges up in price today, and you look at the daily chart and see it didn't break the trendline, you are fairly safe in assuming it didn't change direction. This is actually a lot easier than I probably was able to describe. Look at some charts and place a ruler to the screen and see where it reversed by connecting tops and bottoms. When someone mentions a stock, th first thing i do is look at the daily, and if it looks to have reversed, has unusual volume, or some interesting volatility, then I will look at the intraday chart for the last 5 days. If I'm still interested, then I will go to the fundamentals, technical analysis, earnings forecasts, news, insider action, analyst's opinions, fund accumulations, etc. But I do the trendlining almost unconsciously now just by looking at a chart. Sometimes things jump and I was wrong, but I guess I'd rather miss one occasionally than be right randomly. lastshadow