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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 M. Allen who wrote (35621)	4/21/1999 9:15:00 PM
From: Jenna	Respond to of 120523

Stops with Gap Ups and Without Gap Ups It would depend a lot on if NITE and VRIO gap up in the morning and they probably will. If the stock gaps up If NITE & VRIO gap up there would be no sense putting in a stop at the close but rather at the high of previous day since the stock already showed that much strength to gap up in the first place. So now you have a morning gap up and say you have 2 kinds of traders the ones getting in at the high thinking wow, this is a strong stock and the unfortunate ones that are rushing to cover their short positions. So at this point the stock can fall because those that came in suddenly can realize they might have made a mistake and entered long at a top and rush to sell and then the gap might be filled to the high of yesterday (and not the close). Then you have the shorters who have just lost now scrambling to start all over again and maintain new short positions so the stock can decline. So what do you do? You have put your stop a few ticks higher than the high of yesterday and not the close. You will be out of the position with at least yesterdays high preserve that much more profit. Then I would follow the stock every half hour and pick up the stop higher and higher. If it doesn't gap up in the morning If it doesn't gap up in the morning I'd put in a stop a few ticks below yesterday's CLOSE and not the HIGH since the stock did not gap up and I'd be afraid of momentum lagging. RNWK today started to fizzle and I don't think it would gap up in the morning so for RNWK if I held I'd put in a stop slightly below yesterdays close to make sure I don't lose any of the profits accrued yesterday, but I don't think I'd have a chance of it reaching yesterday's high, since it didn't gap up today. This means say RNWK closes at 190 and the high is 206.. the next day RNWK opens at 193 (a slight gap) I would not see the sense in putting in a stop below 208 but rather a little below 190..which was yesterday's close and not the high. And the same as in gap ups I'd follow the stock every half hour and move my stop about 3% above the bottom of the previous half hour. if the stock is trending upwards. Imagine stairs where the horizontal line is the stop and the vertical line is the ascent to the next level.. As you go to the next level put the stop 3% above the level (the horizontal line) of the previous step. You should always put the stops forward in the direction of the trade so that if you see you are getting stuck and you can't put your stop higher you know you are about to be stopped out and the trade is essentially over with.