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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: John NY who wrote (23728)	1/30/1999 2:13:00 AM
From: Jenna	Read Replies (2) \| Respond to of 120523

A clear established uptrend will give you better odds in the trade. Buying as price pierces the top band is not enough. That is how daytraders trade but we would like to hold our stocks longer, so we need more information. If you have the relevant fundamental and technical picture of the stock you don't have to restrict yourself to chart watching alone like the purely momentum players. You can give yourself more leeway.. Put in a trailing stop or just a mental stop since are planning to hold your position a bit longer. Of course we end up in a situation with the earnings plays where there are extreme price moves to the upside so at times we almost have to be daytraders, but that is fine because we look at percentage gain and not how long you held onto the stock. On the whole earnings plays give more profit per trade than a daytrader who scalps for every 1/2 point or even much less 20 times a day. There are variables that must be taken into consideration. I had 2 charts of MSPG on two separate days the latest was easier because the Market trend was up and so were the internets.. The first one the market trend was down and MSPG in the morning in question was 'bucking' the trend. You are Trading with an established uptrend when: 1)Signals were given at the close the day before of a possible uptrend. The stock closed at the very high end of its trading range on very high volume and/or it broke resistance and held or it had a point & figure breakout. These are some good signals indicating a short term uptrend according to our specific strategies for Market Gems. Now as an integral part of 1)above, you should know a) below: a) How long has this uptrend been in effect? You don't want to get into too much of an overbought situation. The longer the trend is in existence and the more the stock has run up the more careful you have to be of reversal even in an uptrend. A weak beginning uptrend trend is infinitely more superior than a strong uptrend that has been riding over the top of the stochastics, RSI or MACD histogram or whatever.. that is why I like bullish indicators with a weak stochastic or RSI. 2) After a good earnings report the next morning and the stock is beginning to show very high volume and a confirming indicator like the MACD or RSI or Williams %R triggers another signal and a)You have 2 price bars that are already broken through the top of your trading channel (whether you use 5-15, or minutes or 20 minutes or even 1 minute) If you trade like I do 5 minutes is fine and even 15 3)Before an earnings report and the stock looks to be exhibiting 'anticipatory upswing' on high volume and 2 consecutive 5 minute price bars have pierced the upper band. 4) The market itself has a bullish bias. Two of the above should at at least be confirmed I tend to lean toward companies whose historical patterns I have checked out and/or traded in the past. I determine how the stock acted at those particular price levels (you need to have a weekly chart or even monthly to check it all out) How to actually enter and exit trades in this established uptrend The 'easy' MSPG chart was just trading with the trend buying not at the breakout through the upper band but even as the upper band was merely being tested (more risky) but in an uptrend I do it. I did it today with EWBX because the trend was pretty clear. I was even tempted to buy half way between the upper band and lower band which would have been a good decision in retrospect but I do that when I have traded the stock before and/or researched its technical patterns over time the night before, something not everyone who gets the watch list can readily do. When the market is not in an uptrend and MSPG has to 'buck' the trend I am more conservative. Then I wait for the trend to be more established. Waiting until the upper band is actually broken through and selling even if it turns out to be a daytrade (which was the case with MSPG that day) when the lower support band was penetrated and if it is a 15-20 minute chart you won't be tied to your charts all day and have to actively watch it every minute. You could also figure close to the price the support will be penetrated and set up an alert. and of course you have your stops. When the market is in a downtrend with a bearish bias I will act only when I am convinced that the top band has in fact been penetrated and would set a tighter stop that I would ordinarily.