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To: Darth Trader who wrote (15204)	8/30/1998 3:22:00 PM
From: dennis michael patterson	Respond to of 42787

Darth: This is a VERY nice idea!! Thanks. Did you read Sew on TSO? The guy is an ace!

To: Darth Trader who wrote (15204)	8/30/1998 8:12:00 PM
From: Smooth Drive	Respond to of 42787

Hello Darth, Your idea has excellent merit. I guess one would want to massage the Dow 5/10 criteria that has you hold for 12 months and then rebalance (or 18 months for LT Capital Gain purposes). I don't think many folks would be comfortable with a "Don't look" short for 12 or 18 months. But that's an easy fix. A few years back the only stocks I bought were of the DOW 5 variety. But that was before becoming a born again Point and Figure chartist. Additionally, in recent years the Dogs haven't been outperforming the DOW. Something P&Fers are now doing (for long positions) is to take the 5 (or 10) lowest price stocks that are above their bullish support line and have positive relative strength. (Note: This is a P&F derived relative strength.) I'm advised that this system is currently outperforming the DOW and has for many years, but I can not confirm it as I've only recently started keeping my own stats. The big advantage that relative strength criteria has over dividends is the fact that you get to look at all 30 stocks rather than just those paying a dividend (which are currently very low yielding anyway). Other than that, the rules are the same. Buy, hold and rebalance every 12 or 18 months. Another approach for shorting Dow stocks, regardless of how you decided to cover, would be to start with the stocks having a P&F negative relative strength and trading below their bearish resistance line. Then, pick the 5 with the highest price. Stocks meeting criteria are as follows: SYMBOL RS -BRL PRICE AA - YES 60-5/8 BA - YES 33-3/4 CAT - YES 44 CHV - YES 75-1/4 DD - YES 58-1/8 GT - YES 49-13/16 HWP - YES 51-1/2 IP - YES 39 JPM - YES 97-3/4 MMM - YES 72-5/8 T - YES 55-5/8 UK - YES 41-5/8 UTX - YES 78-1/2 Looks like the winners (or losers) would be JPM,UTX,CHV,MMM,AA. I'll put these five and the five you suggested in the old hopper and see how they do. BTW, at the Point & Figure thread Jan & Preston are conducting a couple month stock-picking contest in which you choose 5 stocks. For learning purposes I'm only going to trade the DOW stocks in this one. A portion of what I turned in as follows: CAT: Short; RS +/-; Below brl; DBS on 8/27; Cover @ 51; Vertical Count (VC) of 36; 50% oversold but down trending; Bollinger Bands (13,21 and 50) with supporting indicators say down. CHV: Short; RS -/-; Below brl; DBS on 8/27; Cover @ 82; VC of 66; 50% oversold but down trending; BB's say down. DD: Short; RS +/-; Below brl; Just completed a negative reversal; Cover at 62; VC of 41; 50% Oversold but down trending; BB's say more of same. MMM: Short; RS -/-; Below brl; Would prefer a negative reversal but will take this positive reversal up here; Cover at 75; VC of 65; 40% Oversold and down trending; BB's say down. T: Short; RS -/-; Below brl; DBS on 8/21 and has added 3 more boxes; Cover at 59; VC of 45; 30% Oversold and down trending; BB's say down and we will break the 3 box resistance line! I guess we'll see. Take care, Eric