Forum Archive Index - February 2002

[Phaedrus <Phaedrus@techemail.com>]

Graham,
       Glenda's explanation may well be right, but it does not answer your 
question "Where should have I been looking to have picked up early on this?"  
My answer is, predictably, - the chart.

 Technically, there is no way you would be holding this stock right now. It has 
been in a downtrend for months, and in fact the downtrend has been accelerating 
lately.

 It would not have been unreasonable to have bought in early December on the 
basis of a short-term trendline break, selling in early Janary at $6.20, again 
on a short-term trendline break. This would not have been a very profitable 
trade. Let's assume, though, that you did not sell at this obvious exit point, 
or that you do not use trendlines at all. What, then, would have alerted you to 
this stocks obvious weakness?

 At point 1, prices fell below a recent support level that had been respected 
three times. This was a very clear sell signal.

 At point 2, prices penetrated a lower, more recent level of support, in a very 
decisive manner. This stock was heading South, and gathering speed.

 At point 3, a third, very significant support level was broken. This was the 
kiss of death for BCA. Up to this point, an extremely optimistic holder of this 
stock could have been hoping that it was in a trading range or consolidation 
zone. These hopes were now dashed. BCA was now in a short, medium and long-term 
downtrend. It still is, some weeks later.

 I hope that this post is not seen as "being smart after the event". All these 
support levels were quite evident on any chart, and it does not require 
hindsight to see when they are penetrated. They gave early and repeated warning 
of the weakness of BCA. 

          Regards,
                        Phaedrus.
 

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