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

To: Wayners who wrote (158)	2/13/1998 5:02:00 PM
From: R. Gordon	Read Replies (1) \| Respond to of 927

Wayne, There are a lot of subtle aspects that would be easier to sit and point at a screen for 30 minutes and explain, but here are some primary ones: I go for a 3 or 4% gain in the stock in one day and with about 33% margin - 4 or 5% in one day is great. Take the money and run is the way I like it. Not all stocks are well suited to using DMI. Some have relatively clean patterns like VVUS and some have very difficult patterns like LUV. Clean patterns avoid being whipsawed. But if you do it right, even being whipsawed shouldn't hurt too much since the stock has to reverse its direction. (TA is like following the waves in the ocean - all continues as expected unless an outside factor like news or an earthquake occurs) When the DMI + or - crosses the 14 day average it is important that the stock has not already shot up or down very far in price - a small or very moderate movement is best. (VVUS May 23, 97 It is important that there is room for the stock to go up or down further based on recent history. One great pattern is where the DMI + or - crosses with as great an angle as possible between the two lines. Always wait a day after it crosses. If the stock moved a great deal the day it crossed, wait a day to see if DMI shows further separation and if the stock has recovered much of its price from the previous day, it will very likely give it up again. If the lines do not show a clean break - I wait till they do - and usually at least one day after a clean break. A very good sign is when the + and - DMI "kiss". VVUS 9/29/97 or 11/21/97. That is they touch points. The direction they go after that touch is a very strong indicator of further movement. Sometimes I can take out my 3 or 5% and the stock comes back within the hour and I repeat the trade and get another 3 or 4% again. If a stock is from a healthy company I will go long or short. If a stock has poor fundamentals, I will wait till it is high and only play it short. I hope this helps, Richard