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Strategies & Market Trends : Point and Figure Charting -- Ignore unavailable to you. Want to Upgrade?

To: wizzards wine who wrote (2066)	3/30/1998 10:33:00 AM
From: Ms. X	Read Replies (1) \| Respond to of 34812

Answers from Tom... 1.) Since the sectors and indicators mostly show an overbought condition and a correction is likely sooner than later, how does he prepare for this other than to protect capital? "The first thing we do in our money management arm is to do no harm. Protect profits and don't be afraid to miss opportunity if you sell a stock and it continues going up. Set stops or sell calls. I like selling calls as it takes the emotion out of the "when to sell" decision. I also think a few moves ahead and are prepared to buy more stock in a decline if the bullish percent goes below 50% again. If you hold some stocks that are good quality and not in danger of a stop and you ride them through the storm, prepare to buy more at lower levels. Like the portfolio I put together for TV which was 1-3 Dogs of Dow, 1-3 Spiders, and 1-3 Harley, Hershey, Campbell and Pfizer. The stocks were odd lots and would not be protected. They would be added to on any declines. These are stocks that one can live with and with a small portfolio of $10M, as this one, it doesn't make sense to deviate from a straight line too much." 2.) Once a correction takes place, does he already have a list of buy candidates providing they meet certain criteria after the correction and if so what criteria does he use after a correction..ie, the stock drops to its support line verses falls below support. "You should already know what your inventory of stocks are in each group. This inventory will come from fundamentals. When a sector drops to an actionable level you go to the inventory of fundamentally sound stocks and buy the one that has the best chart pattern. Or you add to the stock you intend to hold on to that is in that group." 3.) After the correction, how important is the RS signal and whether it's in X's or O's as I would guess that many stocks short term RS would change to a column of O's. "No, many stocks RS will go to X's. Like finding shells on a beach after a strong rain storm. The rain tamps down the sand and the good shells become more evident. RS is a very important consideration after a rain storm." Tom