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Technology Stocks : INTEL TRADER -- Ignore unavailable to you. Want to Upgrade?

To: Chris who wrote (5301)	1/29/1999 1:16:00 AM
From: MonsieurGonzo	Respond to of 11051

Chris; RE:" magic lines & stuff " j'assume you already read what DJ an' I were talking about... Message 7532754 DJ asked about a classic T/A pattern, Chris - the apparent "Ascending Triangle", which is drawn on the chart... geocities.com So - the calculated near-target and far-target areas are red lines (minimum) with dashed-blue lines (maximum). The blue, horizontal lines are not "drawn", Chris - they are computed, fibonacci levels. CSCO's most recent candlestick indication of interest was an "evening star" bearish reversal sentiment centered on 20-JAN. That would be the middle spike of its apparent triple-top. FWIW, the entire market made an "evening star" on that date. When the CLOSE is at or, very near the OPEN, Chris it makes a "doji" candlestick, indicating "indecision" sentiment. Indecision is bearish in the context of an UpTrend (and vice versa). Remember, candlesticks indicate sentiment with no promise of extent. On the same website is a chart for PNX.X - Phone Sector Index, Chris - Berney and I are working in that sector... geocities.com ...and this chart has some annotations on it that might be useful. Back to the CSCO chart... the short-term, cyan-coloured moving average is a 16day EMA; up at the top of the chart is a %K = 8day stochastic oscillator. Overlaying the stochastic osc. is a dark grey "momentum" indicator... right now it is set for 50days. I'm still fiddling around with "mo". I adjust the short-term EMA, stoch. osc., and "mo" by fiddling with them from time to time, so that they appear to "indicate" something useful. Being short CALLs, you want to see CSCO spike up to the near-target at ~110 or so intra-day, tell the world, "been there, done that", then collapse back to (CLOSE at) the triangle... better yet, at or very near the OPEN - this would be a "gravestone" doji, and that's bad JuJu (^_^) The following day would likely be weaker; the apparent triangle would fail, and so would the UpTrend Line. CSCO would then likely meander within a trading range with 50d EMA support and 105~110 resistance. OTOH a breakout up from the triangle would immediately attract all the P&F, momentum traders, etc. and all the shorts who executed at the top of CSCO's apparent trading range - as the MarketMakers took out all the STOP/LIMITs in search of supply to fill their order imbalance. The only thing I can say for sure about CSCO, Chris - is that it is at the apparent apex of DJ's "triangle" right now: CSCO will thrust or fail from here. A delta neutral "Long Straddle" would appear to be ideal. (what did DJ call this, the "dummy spread"?) If you are short CALLs at or below 105 strike, and you want to hedge, you could execute a Call Ratio BackSpread here... buying (preferably delta-neutral, but WTH) 2:1 = long CALLs @ 110+ : your short CALLs. Profit is limited on the downside (to net credit taken in). Profit is unlimited on the upside. Maximum loss ( = long CALL strike - short CALL strike - net credit taken in) occurs if CSCO is at this apex upon expiration. I always have to use a spreadsheet to calculate the break-even prices for ratio back-spreads, but some folks can do it with a pencil and paper! If interested in this or, just curious - Check out McMillan, "Options as a Strategic Investment", 3rd Ed., page 212- Good luck, dude ! -Steve