Hi Mark,
Firstly thanks for your input. Good advice!
Lets see, you covered quite a bit of ground in your post so I will just respond without developing an in depth attempt to break new ground. Some of this is worth pursuing.
This whole idea of panning the analyst based on the message delivered is to be totally disregarded as far as I am concerned. While I usually respect the person who vents in that fashion, especially if that unhappy investor is being adversely affected by the analyst determination, while I, may or may not concur, place small value on that kind of commentary.
In fact, depending on the analyst, I pay a great deal of attention as to how the investing trading community will respond to that analyst's commentary. If the analyst loses his following it probably will be because he is not believed. If he is believed then he probably is accurate. I do appreciate that some have an undeserved reputation. However, what I think of the analyst is not as important as what that analyst's influence is likely to be on my trade or investment.
My own experience with regard to volume is the more the volume, the more "stock" (pun intended) I "put" (pun intended) into it. :)
Not familiar with INKT patterns. Still struggling with Dells!
This whole business of the advance decline line has validity but not as a stand alone. I keep an eye on it and "listen" to how it is perceived.
We can even throw in the Bull Bearish numbers, % of those bullish Vs bearish, moving averages % of stocks above their 10 week or 30 week or whatever is deemed pertinent.
I view all of that in terms of how it plays with the investment trading community. However, that is rather general, and not too easily used, short term, by me.
I even look at some of these things and other criteria in a more specific way.
For instance, the volume has not been high of late, as you indicated, yet Dell within that low volume was one, if not the most actively traded stock on the NASDAQ. Comparing Dell's % of volume traded against their peer group is of more interest to me.
Looking at the moving averages of stocks, in general, is fine but again not as a stand alone. Comparing the averages within the group and the group against the sector and the sector against,in this case with Dell, NASDAQ is more revealing.
With regard to the Internet stocks, I really don't have a handle on them. Valuing them, based on incremental revenue increases, I suppose is fashionable.
Again not a stand alone and what happens when they start to show earnings?
Value stocks Vs Momentum stocks.
Looking at those that fit both, if they are one and the same stock, the value stock (totally subjective) becomes so when after enjoying good placement depresses as a result of activity not seen as fundamentally based, the momentum player has determined that the trend is on an upward swing(assuming his play is to ride it up.)
Generally this technique has had success when these market leaders who lead the market down show signs of making the greatest gains on the climb back up.
Knowing how to judge the swing as real as it happens is the key to successfully managing that technique. OK, I guess for those who have a genuine handle on that.
I use a series of comparative ranges and find the opportunities to do this successfully is not as frequent as some would lead us to believe. Perhaps, I'll restate that to read: For me it is not as frequent as I would like.
Many traders will attempt to increase their trading bankroll by reinvesting play, using their entire bankroll again and again only to find that with a series of % increases when measured against their lesser % losses, they actually either lost money or can't compare against the long term buy and hold investor gains!
For those that are attracted to this idea, a word of caution.
Look at this example:
A trader earns 70% on his money.
Turns it back in and loses 40% on his money.
Turns it back in and earns 60% on his money.
Turns it back in and loses 40 % on his money.
Here we have:
Two turns profitably played @70% and 60%.
Two turns unprofitably played at 40% and 40%.
Fifty- fifty chance, 130% on the plus, 80% on the minus.
An average up side of 65% and an average downside 40%
Should be pretty good right?
Nope!
Now I know that you know this and I am sure a number of informed players know or should know this, but for those of us that need to understand why this is not good thing, lets go through the drill.
Starting with$10,000 as a trading bankroll, we play our bankroll in the following manner:
$10000. Make 70% =$17,000.
Turn the $17000.00 play back in and lose 40%= -6800 leaving us with 17000-6800= 10,200.
Turning $10,200 in play, we earn 60%= 16320.
Turning $16,320 and losing 40%=-6528 leaving us with $ 9792.00 or a loss of $208.00 before commissions!
Perception is not always reality, contrary to what some Guru's would have us believe.
Having said that, I am not saying it can't be done. I know differently. What I am saying is that in order to do it one should understand what it entails. Not easily accomplished and using ordinary tools, not likely if one trades too often without special advantages.
You and I probably agree that preservation of capital is paramount. I am a firm believer on stop losses on ones account for obvious reasons.
Institutional buying and selling habits are changing and the notion that they are long term investors while correct they tend to move with a greater emphasis on looking for stocks that they believe will present a better value. They too create a basis for momentum play.
At some point we all reach a situation where our available cash for investing on the dips is not there.
Assuming we truly understand the timing involved in playing in that fashion, that is an excellent way to grow ones money. If so, then in order to generate the cash it must come from somewhere.
Where? For some it becomes a matter of asset allocation. Which fundamentalists and market timers seem to both lay claim to. At the time the decision is to be made, it becomes a matter of dumping something that one has, in order to take advantage of a particular stock's perceived value.
Regards,
QT
Who is the "Jim" you refer to in your post?
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