Forum Archive Index - April 2002

[Phaedrus <Phaedrus@techemail.com>]

 The chart of Gerry's latest pick is at an interesting stage. This stock has 
been in a strong primary uptrend for over six months. It is currently in a 
secondary downtrend. Such downtrends can present good buying oportunities. 
 Dr Alexander Elder uses an interesting technique to time entering stocks in an 
uptrend like this. He suggests drawing a moving average, of such a period that 
about 95% of the price action is above it, and buying or adding to positions 
when price penetrates this moving average from below. I chose a 50 day period, 
plotted in light blue. Note how good any previous entries by this method would 
have been. 
 The upper panel is a smoothed momentum oscillator. Note the close correlation 
between the two sets of signals. 
 I have also plotted secondary downtrend trendlines in red. These give a buy 
signal when price action breaks above them. Again, note the very high level of 
agreement between all these quite dissimilar techniques.
 Right now, every one of these indicators is very close to a buy signal. 
 Use of a simple 100 day moving average would have provided a good entry into 
this stock, and would also provide a simple exit signal. Anyone fearing that 
such a strategy would bind them to their computer screens should perhaps call 
it a 20 week average, and check it once a week. 
 I have a lot of respect for Gerry and his methods. His featured stocks have 
shown outstanding results. It saddens me to see the amount of stick he is dealt 
if he gets one "wrong". Will I be buying this one? Yes. When will I be buying 
it? When the short-term indicators say so. When will I be selling it? When 
long-term TREND indicators tell me that the uptrend is over. When will that be? 
I have no idea.

            Phaedrus.

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