"Technical" Musings...
The Point and Figure methodolgy was mentioned here by me the other day as a system that I favor. While I rely on P&F charts to give me both BUY and SELL signals, I also lean on Willam O'Neil's Cup and Handle charting pattern and John Bollinger's Bollinger Bands when making mostly BUY decisions; Though the Bollinger Bands can give give a pretty reliable SELL signal as well. When making a BUY or SELL decision, I am not partial to either of the three.
A Point and Figure signal is generated after a stock breaks a key support or an important resistance, and that signal is very reliable. Whether long or short, a trade placed after a
P&F signal has, in my experience, a better than 80% chance of generating a profit. On the other hand, I use the Cup and Handle pattern and the Bollinger Bands to anticipate a stocks impending move. And that is the key difference between the P&F system and the Cup & Handle pattern and the Bollinger Bands. The first is used by me to confirm the direction of a stocks move and the other two are mostly used to plan for an impending move. When PPHM printed $2.00, it confirmed the break of a key resistance and hence a solid BUY signal. And last Friday when in message #275 I predicted an impending move in ADVR, PPHM and MOBL, that prediction was based solely on the tightening of the Bollinger Bands in the above named stocks. Of those three, PPHM and MOBL did break out, though PPHM pulled back yesterday. I believe this retreat in PPHM is temporary. Only ADVR has not broken out...yet! Last year, before I started this thread, my BUY signal on EMA was based strictly on the Cup and Handle pattern which took more than a year to develop.
Many of my SELL decisions on stocks that have made a substantial move are based on a fourth set of technical signals; signals which are price and volume based. These signals are a lot more difficult to explain, because a lot has to do with plain old experience gleaned over the years, from observing stocks' price and volume action. These SELL decisions are made by closely observing a stocks price and volume action after the stock has made a big move. Here on this thread, recent examples of SELL decisions made based on the stocks'price and volume action include EMA in November, IDNW in December, CYAN in January, DLGI in February, etc, etc.
Going forward, I will try to inform the thread the reason(s), whether "technical" or "fundamental," behind my decision to either BUY or SELL a particular security...
Cheers!
contax
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