MATRIX Penny Stocks

[skatchmo]

I always do my own dd, and agree that many kinds of formations can be drawn wrong, or spoken into life. I wrote an article on that subject, I'll repost it.

Momo Riders, Just a thought.

(I posted this a while ago, but wanted to do so during high board volume)

Breaks of Previous High's vs. Moving Average Crossovers

Within the board I see these two channels of thought over and over again. They are both very common Technical Indicators. They're common because they're both useful. I'll present an argument in the defense of Breaks of Previous High's being the better buy indicator, but would love to hear what people have to say.

It simply comes down to this for me, when we're talking about trading with the momentum, we have to look for places where the momentum is going to be greatest. In one camp, you have several guys who play moving average crossovers, and while they tell alot for momentum, you don't really ever see the pop with a Moving Average Crossover that you see with a Break of a Previous High for this reason. Traders that trade Moving Average Crossovers for the most part all use different moving average crossovers, or different time intervals, or a combination of the two. As the different crossing over happens, 5 above 10, then 8 above 13, then 13 above 50 and so on, people slowly filter into the stock, not really causing the supply and demand lever to tilt too much, and not really causing as fast an increase in the price as with our other type of play.


With Breaks of Previous Highs, the breakout point is OBJECTIVE. Everyone can agree on a horozontal line. And when everyone agrees to enter a stock at the same time, you see a dramatic shift in the balance of supply and demand. In my opinion this provides a faster, more profitable, and safer play for the trader.

Of course volume, the positioning of the indicators, and the state of the market as a whole plays into each decision made. However, this is an easy way to get out of the mess of entering and exiting trades in no man's where there is no attention being paid to the stocks.

Two additional things on Moving Averages.

While I seldom use them to make my picks for entering stocks, I find they're the best indicators for when to exit a stock. A trailing stop based on moving averages is always an excellent idea in my opinion. It helps to keep your money flowing into stocks that are moving, and not wasting time in stocks that have lost the momo. It also helps you not to get overly attached to any one stock, or so deep in a hole that you can't let go and take too big of a loss.

The other thing to stay away from with Moving averages is rationalizing entering a particular stock. If you're looking for a bullish crossover, chances are, you'll find it. If you manipulate the two averages around enough, you can find a bullish crossover with 50% of the stocks out there, but that doesn't mean they're going to take off now does it?

I know I'm not one of the veterans here, but I hope people actually read this, because I think I make some good points. Also, I'd love to hear some feedback on all this, and what people think. I think this is good stuff, but I'm posting it in part because I want to learn more, so I look forward to hearing your replies. Thanks.