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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: RealMuLan who wrote (5733)	3/5/1998 8:48:00 AM
From: Susan Saline	Read Replies (1) \| Respond to of 120523

repost ... correction plan To: +the Pup (3691 ) From: +LastShadow Friday, Oct 31 1997 2:55PM EST Reply # of 5733 For what its worth... Using a combination of charting, technical and neural analysis, I have determined an intriguing relationship between closing prices the two days before a major correction and the amount of reversal (rebound if you will). I have only tested this on large cap stocks with high volume in the technology sector, and I would like to hear from anyone who sees the pattern in other stocks. The reason I went looking for this was due primarily to the inability to make online/phone trades in a reasonable time on Monday. I had placed all of my orders with limit buys the night before, and those all filled. I wanted to see if there was a significant and predictable correlation between the price/volume action on the two days preceding the major drop to allow an end-of-day trader (or Intraday who can't get through) to take advantage of market jumps with some safety. Here is how it works: At the end of the day the market tanks (Oct 27th in this case), print out the 5 day charts of the stocks you are interested in. Use that day's close (10/27) as the Limit Buy entry for tomorrow (10/28) Use the close on the day prior (10/24 in this case) as the Sell Stop (note - must have closed higher than the day of the big drop - 10/27) Use a protective Sell Stop 20% below the drop day's close. Now, if the stock gapped open, you wouldn't have been filled. If the stock falls more than 20% after open on the following day you sell at a loss. If the stop rises more than the close from two day's previous, you get out early, but profitable. In every case I looked at it would have worked: Stock 10/24 Close 10/27 Close 10/28 Open 10/28 Low 10/28 High Probable Sell Profit (=Sell Stop) (=Limit Buy) AAM 12.75 10.75 10.25 9.75 13.5 12.75 2 CPQ 70 60 57.5 57.5 70 67 7 GE 66 62 59 59 66.75 65.5 2.5 ORCL 34 31 29 29 35 34 3 SUNW 37.5 34.5 31 31 37.75 37 2.5 BA 48.5 44.25 43 43 49 47 2.75 The calculation of profit assumes you would have your buy order filled at the Limit Buy price (could have been lower in the above cases) and sold at the best run of sell prices after breaking the sell stop point (again, may have been more). I didn't post the lower protective sell stop, but it never hit it for any ticker. I intend to test this with real money when I see the next tanking due for technology sector (only one I looked at data for), although I will probably give myself a - 5% margin on the safe side of the Sell Stop. At any rate, if anyone looks at their stocks and sees this was a fallible method, please post the ticker so I can go look at it. Thanks Have a safe weekend and watch out for the kids! lastshadow