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Mattu

03/13/03 10:32 AM

#21694 RE: kgoodrich #21693

KG, could you keep this stuff on the appropriate boards? This is the site Q&A, not a stock discussion.
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Bob Zumbrunnen

03/13/03 11:47 AM

#21698 RE: kgoodrich #21693

First my prayers go not only to your dad but you. I was closer to my father-in-law than to my own father, and lost him to a stroke a few years ago.

What it looks like you're doing is taking some very simplistic and basic parts of Technical Analysis and ignoring some of the more arcane but far more important parts. To put it in non-TA language (I'm also not a TA person and instead prefer to do my FA and pay attention to TA people), price movement by itself isn't enough. The volume and its impact on how many shares have been bought at what average prices (and are therefore likely to sell at certain prices) is extremely important.

Also, penny stocks are generally exempt from TA, IMO. They are driven far more by fundamentals, news, and rumor than what the charts say they should be doing.

An important thing to keep in mind with TA is that the big institutional buyers/sellers are experts in it and if the TA says they should be buying, they buy. And vice-versa. Because those kinds of institutions generally aren't involved in penny stocks, penny stocks tend not to move in accordance with the "rules" of TA. The big guys make TA into self-fulfilling prophecy in a way. If the TA says that the price successfully tested a support level and should be bought because it's more likely than not to go up, they jump in and buy, which makes the price go up.

I think it's perilous to only use just the percentage of price movement for a quarter. It's just one aspect of TA and using it for investment decisions would be akin to playing with a partially assembled gun.