Definition of stop: Stop the damage.

Posted on Jan 25, 2008 by in Letters

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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