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

To: Chris who wrote (14552)	8/13/1998 3:50:00 PM
From: Robert Graham	Respond to of 42787

Follow the tape on some stock all day for a try. Select representative stocks from different types like CMGI, AOL, INTC, IBM, MSFT, and GE for examples. You will find that stocks do not trend in the same way as they do on their daily charts. So IMO MA crossings is a rather limited approach which may not work under "normal" market conditions. Also consider the market you are in right now. This market is not representative of what you will end up having to contend with in the future, and is definitely different from the past. There is no trend to this market on a macro level , but on a microscopic scale, there appears to be stocks that are trending intraday. You will see thee same stocks behave differently in a more "normal" bull market which may not lend itself well to a MA crossover approach. I think the idea is to identify the type of stock you are dealing with, one that ell fit will with one of two basic approaches: a trend trading strategy and a countertrend trading strategy. This assumes you are not scalping. Scalping requires a very different approach still and works off of momentum of intraday price swings you identify by the tape. A trend trading strategy can work on stocks that have broken out or have demonstrated strong short term momentum that you can detect early and that will continue over a period of multiple days. In the past earnings plays were an example of this. In this type of market, such a stock is difficult to find, and to rely on in its follow through. INTC was an example of this. In this market, I think it would be easier to take a counter trend trading approach and make it work more reliably. You need indicators not only to determine and filter for the type of stock you are interested in, which includes identifying the trend, but also indicators for entry and exit. Furthermore, IMO it would be important to develop techniques to reenter a position you are stopped out of. This is particularly helpful with the stocks that trend due to strong short term momentum. Using stops to protect your position is very important. You have to be quick to exit you position. You may not have the benefit of waiting until the next day when you get the signal to exit. Perhaps a better approach would be to position trade, but develop a system that will let you monitor the trade intraday and make entry and exit decisions on an intraday basis. In this way you are treating your trades as an exstention of the type of trading you have done using technicals. So you would identify candidates for several day position trades. You then would manage your risk on an intraday basis. You still would look to EOD data as an important part for your decisions. But the information you obtain watching the stock intraday can be valuable and under certain preset conditions can cause you to exit during the day. IMO tape reading would be very helpful for this approach. This also would be a more judgement based trading approach rather than a mechanical trading system. Joe DiNapoli would be a good book to read about this type of approach. Joe utilizes charts and price objectives instead of tape reading. He also utilizes Fib retracement levels as the central element in his approach to trading. Just some ideas to help you create your own ideas to your new approach to the markets. Comments welcome! Bob Graham