Forum Archive Index - February 2004

[Phaedrus <Phaedrus@techemail.com>]

Tony,
     TOL is in an uptrend, which appears to be accelerating. It can be 
difficult to time your entry into stocks such as this. It is all too easy to 
delay entry, waiting for a retracement that may never come. The best uptrends 
take off and don't look back.
 One method is to use an oscillator such as the Relative Strength Index. Over 
the last year, an 8 day RSI has given 4 buy signals, three of which were 
excellent entry points. You can see that the RSI is currently deep into the 
Overbought zone, so right now is not a good time to buy. Martin Pring advocates 
the use of a smoothed RSI in his short-term filtering system. This is plotted 
at the top of the chart and as you can see it eliminates the one mediocre buy 
signal, at the cost of a slight delay on the others. Alexander Elder uses a 
moving average on uptrending stocks, buying only when the price is at or below 
the moving average. He regards this as buying "at value". I have plotted a 30 
day sma such as could be used for this purpose with this stock.
 Good on you using both TA and FA. I have never been able to understand why 
some people take such evident pride in restricting themselves to one or the 
other.
              Phaedrus.

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