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maxreturn
745 posts
msg #40482
Ignore maxreturn
1/19/2006 5:02:22 PM

alf44....you're an artiste. I'm going to start using this face at the end of my postings :8^)

BTW...nikoschopen...thanks for sharing the excerpts. You too alf44.


alf44
2,025 posts
msg #40483
Ignore alf44
1/19/2006 5:10:26 PM

LOL

max, I'm gonna start using THIS face...


:8^X


whenever I feel the urge to comment on...well...

In other words, I'm taping my mouth SHUT !

Sorry for the off-topic, niko !

Carry on !!!


Regards,

alf44




nikoschopen
2,824 posts
msg #40494
Ignore nikoschopen
1/19/2006 9:35:13 PM

THREE-DAY RALLY AND A FEW DONT'S

● It's usually dangerous to buy stocks on the third day of an advance. The market generally moves two or three days before it comes to a rest or retraces. If stocks close at top after a three days' advance and open strong next morning, four times out of five they will retrace. But if after a three days' rise the market halts, and there is no decisive movement either way for a couple of days, the retracement is not likely to occur. The advance will probably be resumed on the third day of this resting period, and vice versa after a three days' decline.

● A three days' rampant advance after a prolonged rally, coupled with enormous volume -- culminating in great excitement and enthusiasm, especially on any anticipation of good news -- is an infallible indication that the bull campaign is over, for at least the time being. However, after a period of dullness, when a stock begins to advance on heavy volume, buy it for a three days' rise.

● DON'T go short in a bull market, or long in a bear market, no matter how certain you may be that a reaction is overdue. It is poor policy to run the risk of losing ten points to scalp one. If you have good profits and expect a market reaction, close out your position in the hopes of buying back at cheaper prices. Don't become a chronic bear, blind to all signs of higher prices. Don't allow your desires and hopes to obscure your judgment; wishful thinking must not hijack rational thoughts. If you have been bearish in a bull market, don't reverse your position and become a bull when the advance is over; equally, if you have been bullish when prices were falling, don't become a bear when the bull rally is about to begin. A good adage to adopt is "run quickly or not at all".

● DON'T attach too much importance to the weekly "Bank Statements" (I'm not too sure what he means by "Bank Statements" here), which are often doctored and are usually misleading to say the least. Moreover, don't read news, let alone the gossip column, in financial papers. Insiders manipulate the press as they see fit, and very little goes into public print that they wish to omit. Be that as it may, keep informed of all the elements surrounding the securities you hold, especially in light of how it may influence public sentiment. You want to be a bear when the public owns the stock, and a bull when a large float is held by the institution.

● DON'T get hung over by every print, unless you are an expert at tape reading. Don't handle stocks with very light volume. Don't put all your eggs in one basket. Don't try to squeeze the last penny when you already have a good profit. Don't fight the market. Don't overtrade.


alf44
2,025 posts
msg #40496
Ignore alf44
1/19/2006 10:17:46 PM

"...the market generally moves two or three days before it comes to a rest or retraces..."

-----------------

I COMPLETELY AGREE with this statement !

One of the great old Market Technicians, George Douglas Taylor wrote about this very pattern...many years ago ! When he wrote about his now famous "Book Method"...he described a consistent 2 to 3 day pattern in the Market.

He referred to...


Day 1 as a "Buy Day"...

Day 2 as a "Sell Day"...and...

Day 3 as a "Sell Short Day" !


Linda Bradford Rashke gives full credit to Taylor for shaping her whole approach to Short Term Trading ! One of MY favorite technical indicators (and I learned about it largely through studying LBR's approach)...is a 2 period Rate of Change...ROC(2) ! This little "wiggly" line serves as a proxy for what Douglas originally wrote about (although back then Douglas did everything by hand). The ROC(2) is also instrumental in Rashke's implementation of "Taylor's Book Method." It will "help" you see (once you become aware of it's nuances) the 2 to 3 day pattern that DOES exist in the Market !

Good stuff, niko !


Regards,

alf44





guru_trader
485 posts
msg #40497
Ignore guru_trader
1/20/2006 1:52:31 AM

nikoschopen,
I'm glad you've been posting those excerpts from "The ABC of Stock Speculation" by S.A. Nelson.

I often wonder why the price of one stock rises and falls with regularity, while another stays put over long periods of time.

What really drives the price of a stock up and down?

Several people on this forum have poo-poo'd the role of "funny-mentals" affects on stock prices. I understand their reasoning, but I'm not sure how to integrate that concept since I have noticed how earnings announcements have often resulted in a gap-up/gap-down in a stock's price that my technicals didn't hint at. Aren't long-term investors motivated by earnings announcements and fundamentals?

What about insider trading activity affecting a stock's price? Is there an indicator specifically for insider trading I can use on SF ... it could have saved me a few times. :D I lost some money on a stock recently that I was holding for intermediate-term that looked good with technicals, but those technicals didn't catch the director of the company, along with several major holders, selling a good portion of their shares (my fault for not following that better).

Comments like the following make me really think about how the market works, "We've been struggling as a stock, but not as a company," says Craig Rogers of Cell Robotics.


nikoschopen
2,824 posts
msg #40499
Ignore nikoschopen
1/20/2006 3:12:00 AM

Alf,

Glad that you mentioned Taylor's method, which George Angell & Linda Raschke have embraced. It should not go unnoticed that Angell & Raschke have a firm footing in my life as a trader.


nikoschopen
2,824 posts
msg #40500
Ignore nikoschopen
1/20/2006 3:20:24 AM

guru_trader,

I, along with just about everyone here as elsewhere, can relate to your frustration. Since the nature of your question is largely beyond the scope of this thread, yet important in scope, I would like to set up another thread to perhaps touch on some core issues that might bring light to this issue. I apolgize for not being much help. But until then, have faith and keep studying.


guru_trader
485 posts
msg #40512
Ignore guru_trader
1/20/2006 2:47:32 PM

Yes, thank you, please start that thread


nikoschopen
2,824 posts
msg #40532
Ignore nikoschopen
1/20/2006 10:12:31 PM

SYSTEMS

The two following systems, or rather methods, are as good as any: use the first toward the end of either a bull or bear rally, and continue until an extended movement is indidcated; then switch over to the second.

1) Catching the fluctuations

During a rangebound market, any active stock will move over certain points dozens of times. The plan is to place a net that will catch these daily fluctuations. Buy 100 shares at the market, and 100 more every half point up or down, but don't hold more than 100 at a time at the same price level, and don't accumulate more than 600 shares altogether. TREAT EVERY PURCHASE AS A SEPARATE TRANSACTION (emphasis added), and whenever a profit of one point is made, sell that 100 shares, buying back on a one point reaction. When a purchase and sale are both indicated at the same price level, do nothing. For convenience sake, assume that 100 shares have been sold and 100 bought. If the stock should keep on going up without a reaction, you would thus always be long of 200 shares. Don't get frightened because of a temporary downward tendency. The fluctuations are what bring you a steady profit.

2) Limited pyramiding

When the rules and indications already given show that a pronounced upward movement is not far off, buy on the weakness. Do nothing more until the bull rally swings into gear. Then buy small lots on retracements of half a point, and just as much on every additional half point retracement. Such reactions are continuous, two or three a day, even in the strongest bull market. Continue these tactics until there come two or three days of rapidly advancing prices on heavy volume, coupled with public euphoria. In other words, when the public rushes into a buying frenzy, sell about half of your position and wait for a reaction of at least a point or more. Then begin buying back every half point down. When the upward movement is resumed, repeat the same plan as outlined above.


nikoschopen
2,824 posts
msg #40575
Ignore nikoschopen
1/22/2006 1:29:22 AM

Caveat emptor: After one loss comes many, but the first loss is always the best.

HOW TO PLAY THE GAME SUCCESSFULLY

To play this game successfully, time and seasons are to be considered. As a rule, four months is the usual length of time for a bull campaign. The position of the public and small traders in the market is also of great importance. No bull rally ever got started with only the public holding the stock, and no bull market ever ended with only the public liquidating the stock. Watch the volumes of daily transactions. Both bull and bear rallies culminate in large volumes. By large volumes I mean large in comparison to the preceding daily volumes. When heavy volume is registered, the smart money knows there is "something brewing".

Though the same general tactics are pursued year after year, the smart money constantly plot new schemes to deceive their opponents. If you plan to win, therefore, not only must you master the game but also keep up to date. Good judgment is a precursor to success. If you keep charts, keep them properly and learn how to read them. Do you think a farmer who had never seen the ocean before could navigate a ship by means of charts? I believe in charts only when other indications point in the same direction. When in doubt, do nothing.

Anyone can make an educated guess as to whether a stock will go up or down. But intelligent trading begins with the study of conditions. If general conditions are improving, ascertain if the particular stock to be dealt in is having its fair share of that general improvement. This is the way the smart money make money; not by trading back and forth, but by accurate forecasts of coming changes in value, and then buying stocks in quantity and putting the price up to value. You do not have the same clout as the smartmoney to move the market, but if your premises are sound, you can hold the stock with assurance that the smart money will lift the tide for up for you.

(Here's a rehash of trading rules to live and die by: Don't overtrade, and don't chase after pennies. Take a quick loss when the stock goes against you. There is always another opportunity and another day. If it goes in your favor, be patient and ride out your winner. One large profit will more than make up for a string of small losses. But you knew all of that, didn't ya? <g>)



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