OLD TFMS

[Brandon]

Imagine you are on the roof of your three story house...cleaning the gutters say. Now imagine that a stiff wind comes across and blows you off the roof, making you fall three stories to the ground. The next day you had planned on running the Boston Marathon...would you make it? I would guess the answer to that is no..you would need a period of rest. After resting you would need to train again to get back in shape in order to run the next marathon. Stocks are pretty similar..lets have a look.

http://www.swingtrader.net/zran.gif

The first chart is a daily, the second a weekly. You can see on the weekly chart that ZRAN fell from a high of over $70 a share down to a low nearly $10 a share before it stabilized. Stocks rest by trading in a sideways range for a long period of time. You can see that ZRAN has traded in a sideways, narrowing range all year. After its last low was made it made a higher low...telling us it was gaining strength. When it broke out on the 11 we took long positions in ZRAN as it traded above $16.65. As you can see the stock has been very kind to us over the last several days...producing gains of over $2.50 on a very low priced stock.

Brandon
http://www.teachmetotrade.com