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Strategies & Market Trends : From the Trading Desk -- Ignore unavailable to you. Want to Upgrade?

To: Leman who wrote (3463)	8/7/1998 4:38:00 PM
From: steve goldman	Read Replies (1) \| Respond to of 4969

From our weekly e-newsletter. (tdesk@yamner.com subject: SUBSCRIBE) Lessons from the Trenches -Investment Strategies - Technical, Fundamental and Momentum Investing Part II (archives at yamner.com Last week we discussed the risks and rewards of momentum investing. We presented this as a hybrid of technical analysis. Timing being perfect, a shift in momentum left the markets significantly lower after a few weeks of selling, driving home the risks of such a strategy. This week, we will present the case for technical analysis and will leave fundamental analysis for next week. Generally speaking, technical analysis is the study of the prior performance of a stock in an attempt to determine future direction. Technical analysts typically employ various charts and graphs of a stocks performance over various time frames in determining the potential for upcoming action. Such an investment strategy strives to find stocks which particular chart patters which seem to indicate future direction. Technicians use terms such as support and resistance, breakouts, as well many 'catchy' phrases to signify the particular patters, such as "head and shoulder", double bottoms, triple tops, pennants and flags. Technical analysts usually place various studies as overlays on their charts which involve scientific, mathematical formulas. Some popular studies in names such as stochastics, momentum, accumulation & distribution. These studies are themselves graphs based on the stocks' statistics relative to user defined variables. There are arguments that could be made on both sides of the fence. In its favor, certain patterns do in fact repeat themselves throughout the charting of stocks. If patterns can be shown to behave in a certain fashion X% of the time they show themselves, then, within a certain deviation, when the pattern occurs again, there would be a X% chance of the action taking place again. Concepts such as support and resistance are fairly well received even by the most rigid fundamentalist. As in any investment strategy, the jury is out on whether or not fundamental analysis holds the truths of the market. Talk to a fundamental analyst and catchy phrases such as bollinger bands and moving averages roll off their tongue with all the confidence of a rocket scientist. Nonetheless, ask a fundamental analysts what they think of technical analysis as a means of predicting future performance, and you might here the study referred to as 'mumbo gumbo' or 'tea-leaves', one of those pieces of wood that if held properly tells you where to dig for oil. What is our take? As I mentioned last week, we are primarily fundamentalists with a touch of technical analysis to confirm our thoughts. We might turn up several picks as a result of fundamental research, our primary factor, and then simply employ technical analysis to confirm, to give the 'all clear' signal. Well, we are clearly not technical analysts. We do though employ many of the studies forcing out picks to meet two standards, one more stringent and the other simply to confirm. ***********************************

To: Leman who wrote (3463)	8/11/1998 4:39:00 PM
From: steve goldman	Read Replies (2) \| Respond to of 4969

Special Event For those who can attend, I will be hosting a special chat session on Ken Wolff's Momentum Trading IRC Chat Site this Thursday, at 12:30am Eastern Time (9:30am pacific time. Topics to be covered are: Nasdaq Level II, SOES, SNET and ECNs, etc. Ken Wolff has agreed to open his chatsite up to all visitors, free of charge, for the Special Session. Please visit his site at mtrader.com. Instructions on how to enter the site via. IRC can be found at mtrader.com. The free IRC application is available at this page mtrader.com. We may reference images found at yamner.com. This is a PKZIP of all 7 images we may reference. Hope to see you there! Regards, Steve@yamner.com