Beginner Question about Swing Trading Exit

This is a discussion on Beginner Question about Swing Trading Exit within the Swing & Position Trading forums, part of the Methods category; Originally Posted by tdrtw Glenn, thanks for the info. I've posted 2 charts. 1) BMD - would this be considered ...

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Old Nov 2, 2006, 9:50am   #17
 
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Quote:
Originally Posted by tdrtw
Glenn, thanks for the info.

I've posted 2 charts.

1) BMD - would this be considered bottom fishing or a potential change in trend?

In my virtually non existant experience, I would consider this a potential uptrend change looking at the 3 month daily chart. Though it appears to be at a current resistance (green line). If it pushed through the next day I would consider it good to go. Though I would be wary about where to put the stop, I am having difficulty in seeing a clear R/R on this one.

But looking at the 2 year weekly, would you consider it bottom fishing?

2) MSFT - on the 3 month daily, it appears to be on a clear uptrend (is there a thing called 'top fishing'???), but when viewed on the 5 year weekly, its pretty much hitting resistance.

I sit on the fence on both of these.

"1) BMD - would this be considered bottom fishing or a potential change in trend? "

It doesn't matter, that's not important. You have to look at things in a different way. Try this: -

Imagine you are looking at BMD as a house to buy a share in. The housing market has been going up and BMD has halved in value. There is something wrong with this 'house', so would you buy a share in it ?
You must get the odds on your side.
There's an old saying "When the tide goes out in the harbour, the good ships go down along with the bad".
The tide has been coming in and stocks have risen, but not this one. It's got a leak. You can't fix the leak and you don't know if the owners will, so why speculate on that ?
Leave it to rot on the bottom and look elsewhere.

MSFT has been going sideways for 4 years while the whole the market has gone up 50%. Same story as above.

My message is that you can't just look at stock charts in isolation. You must look at the market and preferably the Sector the stock is in first . Start at the top and work down to the stock.
If the stock is not behaving as the rest of the market, steer clear.

Unfortunately "Brain Surgery in one easy lesson" is not possible, but if you don't accept these principles then I won't have helped you even a tiny bit (imho).

Glenn
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Old Nov 2, 2006, 10:53am   #18
Joined Mar 2003
Hi tdrtw,

BMD is hitting overhead resistance at $4.25, so be cautious if you're looking at buying.


Thanks

Damian
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Old Nov 3, 2006, 6:33am   #19
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tdrtw started this thread Glenn, great thoughts.

I posted a chart for Fedex. To get the odds on my side... I looked at the "Air Freight & Logistics Sub-Industry", the last 12 months is a 10.2% gain.

It appears to have hit resistance of around $117 a couple of days ago and appears to be on its way down. In a predictable world, I would expect it to drop to around the $100 mark, at which point it would produce a potential buy (I would watch the candelstick patterns and look for a reversal signal??).

Any thoughts anyone?

Damian - thanks for the info.

Cheers,

tdrtw
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Old Nov 3, 2006, 9:29am   #20
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Fedex is a difficult one to call, because even though I agree it looks more likely to go down than up, it's got support levels at $110, $107 and $104 before it goes anywhere near $100.

If I was thinking about buying into the Transport industry, i'd be watching CAL (Continental Airlines).


Thanks

Damian
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Old Nov 3, 2006, 9:53am   #21
 
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Quote:
Originally Posted by tdrtw
Glenn, great thoughts.

I posted a chart for Fedex. To get the odds on my side... I looked at the "Air Freight & Logistics Sub-Industry", the last 12 months is a 10.2% gain.

It appears to have hit resistance of around $117 a couple of days ago and appears to be on its way down. In a predictable world, I would expect it to drop to around the $100 mark, at which point it would produce a potential buy (I would watch the candelstick patterns and look for a reversal signal??).

Any thoughts anyone?

Damian - thanks for the info.

Cheers,

tdrtw
Fedex follows the Dow pretty closely. See pic.
Buy when Dow oversold (i.e. buy the dip) and don't forget to put your stop in.
If the Dow has topped out and starts a bear run you must protect your capital.
Dow has underperformed UK and European indices, so there should be more upside, but nothing is guaranteed (and I'm not qualified to give investment advice).
To get some analysis on the Dow, see Ed Downs at www.signalwatch.com/markets/markets-dow.asp.

Glenn
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