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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chris who wrote (12262)	7/17/1998 10:24:00 AM
From: Magnatizer	Respond to of 42787

hey buddy. good post ht david off on a little road trip. Can't wait to get back. Dow top call 9397.9 in the short term.

To: Chris who wrote (12262)	7/17/1998 11:34:00 AM
From: Dom B.	Read Replies (2) \| Respond to of 42787

Excellent notions, Chris...but only should one has made the decision to sell. IMHO. Msft has been making new highs lately. Ditto Dell and Aol. I'm hanging on until sector has weakened, and then... But, hey, nothing wrong in taking profits!!! Good luck...//dom

To: Chris who wrote (12262)	7/17/1998 12:13:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 42787

Looks like MAIR effectively bounced from that support figure you gave at 25. What this support figure a confluence of Fib lines? Or just one Fib line? Due to the gap up and down, a short term resistance has been formed at about 26 3/4 that I think it will have trouble making it through. There may be a couple days further consolidation before continuing up to its previous high. Also note here that is may have been best to anticipate the support at 25 with a stock that has this type of price action. But his would of been a bold move considering the selloff and the velocity down of the price including the gap down. But this is when trades can really pay off. IMO this in parts explains the pop in price today. Right now the stock is at 26 3/8. The bounce apparently started yesterday which would of been observable on the tape. So one could of used the tape to help anticipate the bounce. This would of made for a quick one point or more profit within a day. Funny thing is I think this riskier approach in palying off of a bounce from a retracement does not have much more risk than an entry at the gap up of the stock before tis subsequent selloff. Perhaps even less risk. This depends on how good a trader is at reading the tape. By the way, this type of play on retracements is covered in the book by Joe DiNapoli called "Trading with DiNapoli Levels". This book by DiNapolis worthwhile reading for the short term trader which is a fairly good introduction on how to trade using Fib techniques by an experienced trader who has traded on the floor of an exchange. The only other book I know of that covers this subject is nuch cheaper but much more difficult to read and does not go to the extent of showing a system that can be used with the Fib approach which is IMO very important in order for this approach to trading to work. Joe DiNapoli's method does not utilize Elliot waves to describe the wave action of a stock. Bob Graham

To: Chris who wrote (12262)	7/18/1998 11:34:00 AM
From: Robert Graham	Respond to of 42787

I looked at MAIR again at the close of Friday's trading. The weekly chart looks good even though the Stochs looks about to give a sell signal. The daily chart indicates that there may be consolidation up ahead for this stock below its previous high. Strong resistance at its previous high. This is caused by what some refer to as "price rejection". The high of 28.75 was considered a price at the time that was significantly out of place from what is considered "fair value". So this appears at a long bar whose high is the price that is being rejected by the market followed by another long bar usually identical to or lower than the precious bar closing at its low. The strong resistance at its previous high coupled with how the gap up was validated by a gap down in the same place as the price continued its plunge from its previous high tells me that this stock will have problems making new highs in the near future. Furthermore, the Stochs in relation to its signal line is still indicating a sell. I really do not know how relevant the standard Stoch is in the case of a momentum stock which also can be volatile like this. The bounce from the support at about 25 and the close at the high of the trading day indicated strength in the bounce and continuation Monday. I do believe the momentum of MAIR is taking a hit. Using what I respectfully am going to refer to as "the Judy technicals to momentum stocks", this stock on its move down did violate its 13 day MA. But IMO the strong bounce may have in part mitigated this violation of the MA. Also the violation lasted only one day. But given the resistance in front of it, I do think it will not resume its strong uptrend in the very near future. And with momentum stocks like this, once there is a proven falloff of the stock, this encourages additional selling where the traders are willing to quickly exit the stock. I am sure some momentum players were taken by surprise by this breakdown of the stock, and there are others that just jumped on board at the gap up that are left in the red right now. Those who have not yet take their profits on this runup from the breakout will likely do so in the next couple days. Price rejections need to be taken seriously. The example of MAIR looked upon as a type of momentum play I think highlights the pitfalls in trading such a stock. This type of trade IMO is only for the more experienced trader that understands the price and volume action of stock, can interpret at least basic tape action on the stock, and uses good and well-proven entry and exit strategies that have been designed with this type of stock in mind. Tape reading particularly comes in handy when attempting to enter and exit a strong run up of the stock after the breakout and before the buying activity has had a chance to "relax" before continuing. Discapline is a major part of the formula for success here. Position traders who use the tape to fine-tune their entries and exits still need to take their entry and exit signals from their daily charts. Traders who entered on the gap up either did not have the required background or proper discapline to trade a stock like this. Compare this to the traders who entered in the two possible entry points after the breakout that I have defined in an earlier post. These individuals needed to be good tape readers to make such a call. They are probably already out of this stock by now and likely got out on the gap up, for it is a good rule to sell into strength. The smart position money, which there evidently are many more of with this stock, got out on the following day once that gap up showed up on their charts. I will also note here once again that in this case the gap up was not a sign of real strength due to its position and the volume both before and at the gap up. Many traders were looking for an exit to take their profits on the run up from the breakout several days ago. The price and volume action of this stock indicates there was little profit taking during this uptrend and the buying abated indicating that those who were going to trade this stock were already invested and waiting to take their profits. But sometimes all you need is an appearance of strength to attract more money into this stock to support the profit taking of the smart money. Furthermore, a position trader who took a position on the gap up was likely making the mistake of basing their decision on what they saw as price action during the day. This is the not uncommon mistake of context many ambitious position traders make once they start to look at the tape and the begin to manage their trade in relationship to what they see on the tape. You see what can result from this approach of confusing the context of the trade. In this case the gap up was not placed in the perspective by that position trader of a stock on the daily chart showing signs that its strong uptrend in its later stages and this would be a bad place to enter the stock. IMO the profit to risk at this point is not to the position trader's advantage here. Best to wait for the pullback due to the predictable profit taking that will occur soon. This price and volume activity on the chart should of placed the gap up into question in the position trader's mind. Hope this helps. Comments welcome! Bob Graham