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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Glenn D. Rudolph who wrote (21261)	10/12/1998 11:45:00 AM
From: Bill Harmond	Read Replies (1) \| Respond to of 164684

Nothing from Readerman.

To: Glenn D. Rudolph who wrote (21261)	10/12/1998 1:25:00 PM
From: Rob S.	Read Replies (1) \| Respond to of 164684

Here's a little discussion on Technical Analysis and how it might be used to improve trading: Quote.com has added some key indicators to their LiveCharts service. This is the best free, flowing chart service I know about. Take a look at the Amazon chart: quote.com Go to the bottom of the chart box where there is a pull-down menu and select stochastic. Then go up to the top of the box to the pull-down marked 'Time:' and select 30. This changes the time scale and loads up the stochastic indicator. The stochastic is particularly useful for short-term trading. You should see that Amazon has now traded up toward 99-100 and the stochastic indicator is near the top end of the band at 95-100. It has begun to roll over and has almost crossed the indicator line. There has been a wide divergence between the indicator line and stochastic indicating a short-term over done move. If you switch to the bollinger bands, making sure that the 'Len' figure matches the scale of the chart (we set that at 30), you see that the stock moved up above the upper band. The bollinger band works on the idea that bands can be statistically derived at from historical information that will "contain" the normal movement of the stock. If the stock is volotile, that's OK too because the bol bands take that into account if scaled properly. The trend line of the bb has turned up. This will be a short-term trend line because of the scale we are now looking at - it reflects the fact that the price has moved up after a brief basing period. It should be taken as an indication that although the longer term trend is negative that some caution should be kept in mind. So much depends on the NASDAQ and general market, IMO, that a trend up in them could lift the internuts as well. But for short-term trading the item to watch is that AMZN and other internuts have pushed through the upper bounds of the bollinger bands. When the bounds are exceeded in either direction, the stock usually corrects to some extent to come toward the trend line. Quick movements are often met with at least a temporary correction toward the TL. While looking at AMZN or some other stock that correlates well with movement in the broader markets, you can see how they look in comparison: Go to the sectio of the chart box under the heading US Stock Market Watch and click on $COMPX OR $INDU. You will likely see (time marches on) that the charts look very similar for each of the indicators in comparison to AMZN. At this point, the NASDAQ punched briefly through the upper bollinger band and is now pulling back a bit. The stochastic shows that it is in the upper range and has crossed lower at least briefly. If you look at the chart for the market tick ($tick) you can see that it started heading down briefly before the markets pulled back. A look at this often points out extremes in market sentiment. This too tends to correct toward the trend line. The summation of these indicators just confirms what many experienced traders have learned 'intuitively' from watching the movement of the stock. They tell you what the major trends are and when the stock has over-reacted. The money flow indicators tell more about whether money is actually moving into or out of the stock. This is something you can understand from watching the price/volume relationship but is often not recognized by many investors. The first assumption might be "the stock is up (or down), that means smart money is loading up (dumping) on it rather than selling". This is often where TA can become very useful - in helping to confirm unemotionally what is really going on behind the price movement. My guess is that this rally in AMZN will falter despite the movement up in the market.