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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: CCWriter who wrote (7974)	7/27/1998 10:23:00 PM
From: Herm	Respond to of 14162

Blaine, "A picture is worth a thousand words." Adjust the time span to three years for the chart and look over every tag in the upper and lower BBs. At the same time, look at the RSI when the event occur. What do you see as the normal readings for the RSI? To me CPQ appears to bounce up tags upper BB and moves down and tags lower BB like clockwork. Do you see any fake outs when the stock drops in the middle and reverses. I would bet any minor occasions are surprise announcements that nobody can predict except Michael Douglas in the Wallstreet movie. The trend is your friend! Looks like the $28.00 is your CPQ target bottom as of this writing. A few features about the charting. 1. Sometimes the bands narrow between upper and lower. Mathematically the formulas calculate the momentium and volatility. Narrowing bands generally take less time (weeks) to tag the opposite BB. 2. You should adjust the days for average, eg. 10, 20, 30, 50, until you get a good fit for the particular stock. You know it's right when the tags are uniformly crossing over or tagging and bouncing. What floats your boat! 3. Keep an eye out for major events like earnings, stock splits, or anything that would throw off the natural cycles. 4. Pay more attention to the BBs and the angle of attack. Sometimes you will see the lower band turn upward and the top BB is still angled downward. Check the volume and you will see that may occur on light volume trading days like around the day for weekend holidays. The MMs are jerking things around. You will notice that most of the RSI lines are jagged and slanted left or right and rarely a straight line on the vertical plane.