Archive for January, 2008

Definition of stop: Stop the damage.

Posted on Jan 25, 2008 by .

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The reason you honor stops is so that you don’t wind up owning Enron at 1/16. You never know till later whether you did the right thing. You only know that you did the disciplined technical analysis thing. It doesn’t work every time, but it’s still the right thing to do as thousands of charts have shown. With lower lows, broken trend lines and two (at least) important short basing points the likelihood is that the Dow is headed lower. At this point all the important trend lines are broken.

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Market panics. Technicians yawn. Is it a bear market?

Posted on Jan 18, 2008 by .

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It is not necessary to predict a bear market or even to identify it in its early stages. All you need to know is what to do now, and that is indicated by the ending of the sideways pattern with solid closes below the lowest horizontal line. Holding stocks in these conditions is a good way to go broke. The tide is now running out. Visualize Enron.

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At the tipping point? At the bungee point? Is there a point?

Posted on Jan 11, 2008 by .

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Indeed. More points than an eight point buck. Point 1. Stop taken out. Point 2. Theoretical question about placement of stop. Usually in a sideways pattern the stop will be set below the bottom of the entire pattern. Using the basing point routine we computed the last stop here. We could do a lot more head scratching here but net net (point) that system is on the sidelines.

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Whoops. Was that an air pocket?

Posted on Jan 04, 2008 by .

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And is the parachute working? Or the bungee cord? That we won’t know till next week, but we do know now that the price has returned to the bottom zone. As can be seen there are other regions of the zone below so not much is proven by taking them out, aside from the proximity of the stop which would officially put our Dow trade into cold storage.

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