Forum Archive Index - May 2002

[Phaedrus <Phaedrus@techemail.com>]

Russ,
      The attached TLS chart beautifully illustrates some of the basic 
principles of technical analysis.
 It shows price trends, both up and down, extending over years, with the 
trendlines being "respected" many times.
 It shows a Trading zone.
 It shows a strong support level, that remained valid (almost to the cent) in 
spite of the passage of 3 - 4 years. The market has a long memory!
 It shows broken support becoming resistance.
 It shows the value of holding stocks while they are in an uptrend, and the 
folly of continuing to hold them once that trend ends. 
 It shows the futility of holding stocks that are in a downtrend.

 So, what to do? Depends on your approach. Conservative longterm investors 
would not even consider buying TLS until the current downward trendline is 
broken. Those operating in a shorter timeframe would see right now as a 
low-risk buy opportunity. Why? Because of the close proximity of a confirmed 
longterm support level. A stop placed just below this would ensure minimal loss 
should the trade go against them. Any break below this support level would be a 
very significant event, with serious implications.

                  Phaedrus.

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