Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : IDT *(idtc) following this new issue?* -- Ignore unavailable to you. Want to Upgrade?

To: joe inti who wrote (7339)	5/6/1999 8:21:00 AM
From: Condor	Read Replies (1) \| Respond to of 30916

OT . Good reading for turbulent markets! Even though this relates to QWST there are some interesting comments regarding general trading. From : kensey May 6 1999 1:14AM Re : Bounces the 50-day EMA. Selling slows. Potententially a double top or more basing to follow. (Long Recommendation) QWST - bounces the 50-day EMA. Selling slows. Stochatic lines emerging from overbought. Long persistent uptrend. MACD lines above center all the way. Dry heaves in the market are affording a more differentiating view of the landscape. In broad uniform run-ups, most everything and anything climbs higher, especially when the peak is hit. Most rallies start off with the market leaders of that cycle out in front. Then things get less discriminate as the rally ages. Then there is a blow-off phase accompanied by a volume climax. When the first serious correction ensues (and it is usually somewhat out of nowhere and few are really prepared) most everything and anything drops sharply. Those with the loosest morings are washed out first. It is difficult to time the top at this point. But thats ok. Again, it usually comes up as somewhat of a surprise. In fact, one way I recognize that it is at hand is that I start to make a few really bad trades. _really bad_. Trades that stand in marked contrast of how things were going for weeks on end. But the initial sensing of this happens while there are others stocks that are still doing well. So I think it is _me_. Well, it is me. But it means that the current environment is migrating to one that is becoming a tad more difficult to navigate. For example, SUNW stock got wasted while many stocks were still doing very well. Somewhat of a shadow on the wall. Then of course, after a brief flux of increased volatility in there are unsustained buying climaxes, the entire rolls over. At the time that total capitulation is reached, big and smart money steps are starts buying it up. Not just smart, not just big, but big and smart. These are long time bulls that have been amassing cash just waiting for such an opportunity. They live by hard and fast rules that prevents them from chasing stocks and rallies as they ratchet higher. They buy over time and have all the blue dots in exactly the right places as the discipline and risk management has been nailed to a T. Actually by a few hard and fast rules. Such as 'never buy any stock until it hits the 50-day EMA'. That is the most popular. It really is all you need. And it is also somewhat of a practical matter - they could not buy even if they wanted to as they would end up moving the stock. It is only when sellers are handing over to them hand and fist. So they operate on the exact opposite side than most. They have a huge advantage over you and I in that they have no forced reason to have all their money working for them at any one time. So they sit there and by and large do nothing _most of the time_ as it poors in the door. So the first bounce rally gets bought up but most of the buying public is still somewhat disjarred by the past decline. So when the buying subsides, a quick pullback occurs in which more loose dollars get washed out of the stock and smart money steps up to buy again. So there is winnowing in which the money that composes the base of holders gets more secure, smarter, stable. Meanwhile there are many who bought at the top of the bounce and become more depressed. They exit and hasten the process by which enough consensus has been reached that a rally of a longer and substantial nature arrives. Always. It always does. Every time. You are either bullish and think the long term trend is up or you are a seller and think that the long term trend is down. Once that is laid in place, it is an act of discipline to not chase stocks once they start to reach overbought levels. If one consistently looks at the Stochastic - Bullish list for ideas, you are almost guaranteed to not chase stocks simply because you happen to know about them or that you happen to see being hyped on TV. You really can tune most of that stuff out. The stocks you might see on the Stochastic - Bullish list might be new to you but you can then do some due diligence and find out more. Even if you happen to be focusing on one particular sector, you can create a tracking portfolio of just those stocks and hit 'Graphs in Bulk' and eyeball for the Stochastic Oversold set-up. Of late and of current I've been focusing on Technology and Internet stocks. It now appears that rotation to oils is occurring. But I don't have to rush out and buy them, I can sit back and wait for those names to pop up on the Stochastic - Bullish list. So in that way I don't even have to know that Oils are rallying. I will become aware of it when the stocks in that group have fallen to an oversold level and pop up on that list. At that time no one will be hyping them and at the moment they will have temporarily faded from the spotlight. So I will not become aware of it while the stocks are ratcheting to unsustained levels, I will become aware of it precisely when its time for them to be bought. If I am a big money type then there is usually enough time to build a relatively big position for when things pick up again. I am not a big money type. Unfortunately I feel compelled to keep all my money invested all the time or I think 'I'm not doing enough to take advantage of this or that rally and that I'm missing out on something'. The way to deal with the account is small or when you really do need to try and stay as vested as possible is to bail out in bulk and in force when it becomes evident that a significant pullback is going to occur. Then you need to start vesting that back again but slowly. Small lots. Whereas you might have been accustomed to 400 share and say $20,000 position sizes when things were hopping and going your way, you cut it to a 1/2 or a 1/3 of that when the stocks you like reach an oversold level. The trick is to not put it all back to work at once. Otherwise, you will feel uncomfortable when subsequent pullbacks occur. So far we have had two. It appears to me that there are some stocks out that should be bought at this time. But the lot size should be small so that if there is further decline or a repeat decline you do not get washed out. Getting washed out now will cause you to miss part of the next rally. Each washout causes a small bit of damage to the psyche. Senses blur and confidence erodes. The dry haves up and down are offering a good view on which stocks are going to be the leaders in the next cycle. A differentiated view replaces the uniform view. The drek either continues to fall or does not rally back. The glimpse of where you want to be in the future is rallying back hard. Like the volume pattern on QWST. Volume during sell-off number 2 is less than volume on sell-off number 1. If I were concerned that this might be a double top in front of a pronounced decline, I would protect the position by buying a slightly out of the money put option. Once options are available on ClearStation you will be able to buy enough put options to cover the $10,000 position. This is what Clinton calls 'participation without impunity'. Other notables in the Recommend List. GILTF gets dropped today and any stock that dropped today gets winnowed. Small loss. Broke through support. Range bound trades that go bad end up making you look silly. FBG didn't bounce. Since I bought this stock at the wrong time (way overbought) the level of pain is above the threshold. In general, the things you end up holding onto are those you got at the right time. The things you end up washing out on are those you got at the wrong time. Plus a post on the boards there suggests that this is a loser stock. See post #49 for details. Go back and check the dot on my CNET recommendation. Ain't that sweet? Since I got in at the right time (oversold) I felt no pain when it dropped earlier this week. VDAT arrested the decline above the prior most recent low. That's good. However, we need volume there. Today was a good day to add PILT. Nice reversal day. Volume accelerated towards the close as a lot of buyers came in. This was the day to add to your position. NITE - kicking ass and taking names. This is what the leaders of tomorrow look like today, which is like leaders. IDPH - good example of repeatedly and consistently holding the 50-day EMA. NETG - at the buy point once again. That is, the I believe in this stock long term so I will accumulate it over time on weakness kind of stock. I don't however. WCAP - bounced the 50-day EMA today but volume is unimpressive. Probably not the kind of stock investors will flock back to. This is a late in the cycle 'hey Ma look at me!' kind of stock. DCLK - why that sinking feeling this stock hits the rubbish bin at some point? not sure. not acting on that feeling. those feelings are usually wrong. AMTD - bought some today! Brokerage looks good to lead the next cycle! Small position (of course). ENDO - time to lose this one. Stock went down today. Horizontal. SWRX - bought some today! at the bottom of an ascending trendline banded pair (both lines drawn in). objective - sell it when it gets to the top line of the banded pair (both lines drawn in). SUNW - looks busted. time to sell. of course, i'll wait for a bounce in which to do so. EMC - wow! just noticed this! why did this happen to this stock? a gap down? selling in cascading sheets of rain? this is bad enough to dump without waiting for a bounce. GENZ - no idea how this stock got on my list. rallying sharply off the low however on accelerating V (volume). the selling looks exhaustive. looks like the bottom of the cycle has been seen. Made a post on the Vitesse board (post 111) that divided stocks into three bins. We pushed out a minor enhancement to the details page that provides a Preview of the Community messages that have been recently posted for that stock. This will soon be available on Lists. kensey