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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: Mario who wrote (9308)	12/29/1998 11:21:00 AM
From: Herm	Read Replies (1) \| Respond to of 14162

Hi Mario, COHR Season greetings to all the lurkers and fellow forum regulars! I adjusted the BB to 50 days for COHr in order to get a cleaner pattern as possible. That setting varies from stock to stock depending on the trading patterns resulting from institutional buying/selling/covering. Also, in order to create a hyperlink to the chart you need to remove the tail end of the coding to the part that reads "RSI=8." Anything after that is not accepted by the SI editor! Here is what it looks like: askresearch.com Good questions Mario. I will try to anticipate what you are really asking. I am ordering Bollinger's book in order to prepare a more conclusive explanation for the WINS interactive CD project I'm working on. Question #1 - I think what you are asking is, "how do you know when the stock is actually reversing, what are the clues or signs?" First, for those just joining us. WINS describes what price movements of a stock is doing. W=withdrawing, I=increasing, N=neutral, S=sideshows. You and I as investors must be able to anticipate the pivot points and take advantage of the moves by executing specific strategies. That is, either buy stock, buy calls/puts, sell calls/puts short the stock or a combinationn of one or more of the above. Since, WINS is more of an art (that many readers and myself have successfully used to obtain a 7/8 out of 10 correct prediction) rather than a science the best answer comes from Dr. Elder's book. In short, a price trend continues until it reaches a blowout. That blowout is characterize by a volume increase of more than 50% in the same direction of the price movement. So, if a stock price is going down, it will continue to go down until the weak hands fold and there is a panic selling where volume exceeds more than 50% of average. At that point when the pain is great the stock will reverse. Now, should you wait a few day? Well, I would say it won't hurt you much and may save you some whipsaws from time to time! Some stocks move on the dime everytime and others are not consistant. Overall observation of the BB and RSI is what we are concentrating on because it is generally correct. Just look at any chart for the pattern. Question #2. Yes, COHR did hug that upper BB and it also got wider like a rubber-band. That is, the upper band kept moving up while the bottom moved downward. That is an increase in volatility and yes, it generally means a higher stock price. The RSI is the key to the puzzle because the COHR RSI had been that high in the recent pass. So, it was withing the normal trading pattern for the stock. The neat part is that waiting only works in your favor and without an indicator you are investing blindly based on subjective opinions which are usually wrong in the stock market.