MCHP stock analysis help required

[lotsofloot]

Hi Folks

Have being using neural networks to analyse stocks for the last number of years. One of my most successful has being Microchip technology (Nasdaq: MCHP) which over the last year has return 78% profit. As of close this Friday my system has indicated to go short this Monday at $32.25 As I am a better programmer than a chartist I would be grateful if somebody could analyse their chart and give me an opinion on this particlar short trade.

For those interest I am more then happy to publish the signals as and when they happen. Many thanks for all the help I receive in this matter.

Regards

LotsOfLoot

 

[qwerty1]

If you sell it on Monday, you'll be doing so near the middle of a trading range that is now over 5 months old, are you sure you want to do this? A trading range is an intense battle for control of market direction. When a trader buys or sells near the middle of a trading range, he is walking into a firestorm, a trader will almost assuredly feel market heat, the market will force him to make decisions quicker because the struggle between bulls & bears is most intense near the middle. It's like being out at sea, the waves toss & turn you like a rubber duck & all you feel is pain.

The immediate direction points higher towards $35, & if history is any indication, the bears could potentially reply $35 again & push down towards $31. But if bulls break above $35, that will set the stage for a push higher towards $39. The clue that will inform us that bulls will break above $35 is a pullback just below $35. So unless you have deep pockets lotsofloot & feel that you can endure the storm, you might get caught in a washing machine environment that may get ugly. The short term outlook for bears is bleak on this stock. I Attached a chart with commentary.

 

[damianoakley]

Hi lotsofloot,

I personally would want to see some evidence of the stock going down before going short as it had a strong rising day on friday with reasonable volume.

It looks to have strong support around $31.00


Thanks

Damian

 

[lotsofloot]

Mchp

Hi Folks

Many thanks for your replies. Much appreciated. Currently I have 3 signals telling me to short. These have an accuracy of 91%, 94% and 100%. The latter has provided 18 consecutive winning trades. It will be interesting to see how a trading system devoid of emotion stacks up against chartists. Will keep you posted on how I faired.

Regards

LotsOfLoot

Hi lotsofloot,

I personally would want to see some evidence of the stock going down before going short as it had a strong rising day on friday with reasonable volume.

It looks to have strong support around $31.00


Thanks

Damian

 

[Trdr]

I'll say MCHP will rally, and make a new H, will it split ?

I'm interested in your neural nets methods LotsOfLoot,
mainly because I didn't know such systems worked —
don't remember seeing posts from anyone on any forum
stating they've produced " 18 consecutive winning trades "
with an nn system, so either here or on a new thread,
would you:

~ state the program/s you're using
~ explain some of your methodology
~ instruments, timeframe/s being nned

 

[lotsofloot]

Hi Mayo367

Just shorted premarket at $33.33 Regarding objectives and timefame will hold position until system generates next set of trading signals. Lets wait and see what happenings.

Regards

LotsOfLoots

If you sell this Monday lotsofloot, can you give us a better idea of what your objective is or how you'll manage this trade, will this short be a long term hold or short term? what is your profit target? If bulls break decisively above $35 & push towards $38, it will be hard to imagine holding this short, unless you have deep pockets. What you do with this stock should be interesting.

 

[lotsofloot]

Hi Trdr

Programs used are Tradingsolutions, NeursoShell TraderPro and Tradecision all EOD versions. Basically my system is built around using the solution models that Tradingsolutions provide with their software. At the moment I have a portfolio of 22 of these which I run against a stock to see what trading signals they produce. I will only trade a stock if I get at least 2 signals that have an accuracy of 80% or more over a 12 month period. I also use combinations of these signals.

Instead of trying to creat a neural network for a specific stock I use the 22 nn as a scanner to identify good stocks worth trading. If I have time I will use NeuroShell and Tradecision to see if I can verify the trades. The main drawback with using nn models is that they can suddenly stop producing valid trading signals.

Regards

LotsOfLoot

Instead

I'll say MCHP will rally, and make a new H, will it split ?

I'm interested in your neural nets methods LotsOfLoot,
mainly because I didn't know such systems worked —
don't remember seeing posts from anyone on any forum
stating they've produced " 18 consecutive winning trades "
with an nn system, so either here or on a new thread,
would you:

~ state the program/s you're using
~ explain some of your methodology
~ instruments, timeframe/s being nned

 

[Trdr]

Thanks for the info LotsOfLoot, will have a scan of the programs.

 

[lotsofloot]

MCHP Update

Hi Folks

Today at market opening. Cover MCHP @ $31.80. Went long at $31.70

Regards

LotsOfLoot
QUOTE=Trdr]Thanks for the info LotsOfLoot, will have a scan of the programs.[/QUOTE]

 

[qwerty1]

Well lotsofloot, you were long from $31.70, you could've easily reversed & In case you're short, this is how I would approach this one, I would place my stop just above the pullback at $32.80 made on 23-10-2006. Upon closer examination, the bears appear to be exerting greater influence than bulls, the next partial profit target would be $24. Unless support has expanded to $30, but I doubt it, bears hold the cards. Holding a long position is a more challenging proposition for now in my humble opinion.

 

[lotsofloot]

Hi Mayo367

Many thanks for your input. Have just checked ah trading and see its down to $30.50 on weak quarterly report. As my system relies on eod data it is still indicating to stay long. Will check the premarket trading. The problem with following a trading system is that once you start to second guess it you might as well not use it at all. Will keep you posted.

Regards

LotsOfLoot

Well lotsofloot, you were long from $31.70, you could've easily reversed & In case you're short, this is how I would approach this one, I would place my stop just above the pullback at $32.80 made on 23-10-2006. Upon closer examination, the bears appear to be exerting greater influence than bulls, the next partial profit target would be $24. Unless support has expanded to $30, but I doubt it, bears hold the cards. Holding a long position is a more challenging proposition for now in my humble opinion.

 

[qwerty1]

OK, OK, so bulls held $31, so can we now see resolve from bulls? partial target is $35 & the longer term target is $38 & a break above & just maybe you can celebrate with champagne.

 

[lotsofloot]

Hi Mayo367

Was really suprised to see MCHP rise so strongly after which on the surface seemed a poor quarter result. Just goes to show you never can tell. Two out of the 3 signals in my system are still indicating to stay long. The other signal has indicated to exit the position. Will keep you posted.

Regards

LotsOfLoot

OK, OK, so bulls held $31, so can we now see resolve from bulls? partial target is $35 & the longer term target is $38 & a break above & just maybe you can celebrate with champagne.

 

[qwerty1]

Well Lotsofloot, I suppose you took partial profits on longs @ $35? The bears have refused to yield to the bulls above $35 since 5/22/06. And It's been about 2 months since the bulls last threatened to push above $35. However, today we saw a powerful pullback, this development does not favor bears, the bulls have something up their sleeve, the bears will have to fight for this one again, if bears fail to hold $35, the bulls will exploit this & drive the market above it.

 

[lotsofloot]

Hi Mayo367

Sorry I have not keep you posted as promised. System signalled to go short on 13 Nov at $34. To be honest I never like shorting stock particullary this time of year. Will let you know as soon as I get a buy signal.

Regards

LotOfLoot


=mayo367]Well Lotsofloot, I suppose you took partial profits on longs @ $35? The bears have refused to yield to the bulls above $35 since 5/22/06. And It's been about 2 months since the bulls last threatened to push above $35. However, today we saw a powerful pullback, this development does not favor bears, the bulls have something up their sleeve, the bears will have to fight for this one again, if bears fail to hold $35, the bulls will exploit this & drive the market above it.[/QUOTE]

 

[lotsofloot]

New MCHP Buy Signal

Hi Mayo367


System has just indicated to go long at $33.54. Do your owm DD.



Sorry I have not keep you posted as promised. System signalled to go short on 13 Nov at $34. To be honest I never like shorting stock particullary this time of year. Will let you know as soon as I get a buy signal.

Regards

LotOfLoot


=mayo367]Well Lotsofloot, I suppose you took partial profits on longs @ $35? The bears have refused to yield to the bulls above $35 since 5/22/06. And It's been about 2 months since the bulls last threatened to push above $35. However, today we saw a powerful pullback, this development does not favor bears, the bulls have something up their sleeve, the bears will have to fight for this one again, if bears fail to hold $35, the bulls will exploit this & drive the market above it.

[/QUOTE]

 

[thebull27]

Mayo I dont really understand your chart

how would you know that there is a resistance at 31 when the market was at 38?

If you sell it on Monday, you'll be doing so near the middle of a trading range that is now over 5 months old, are you sure you want to do this? A trading range is an intense battle for control of market direction. When a trader buys or sells near the middle of a trading range, he is walking into a firestorm, a trader will almost assuredly feel market heat, the market will force him to make decisions quicker because the struggle between bulls & bears is most intense near the middle. It's like being out at sea, the waves toss & turn you like a rubber duck & all you feel is pain.

The immediate direction points higher towards $35, & if history is any indication, the bears could potentially reply $35 again & push down towards $31. But if bulls break above $35, that will set the stage for a push higher towards $39. The clue that will inform us that bulls will break above $35 is a pullback just below $35. So unless you have deep pockets lotsofloot & feel that you can endure the storm, you might get caught in a washing machine environment that may get ugly. The short term outlook for bears is bleak on this stock. I Attached a chart with commentary.

 

[qwerty1]

Well lotsofloot, what is your opinion of MCHP now? It's at a critical juncture now, something will have to give, one thing is certain, a buyer from $31 surely cannot hope, wish & pray his way to profits. The bears are putting up a stiff fight again at those highs, the immediate picture points to either a trading range between $38 - $35 or a push higher, as long as bulls do not relinquish their authority above $35, it's advantage bulls. The chart with commentary might help you.

 

[lotsofloot]

Hi Mayo367

Good to hear from you again. My signals for MCHP since Jan07 are as follows:

10/1/2007 short@$35.5

22/1/2007 long@$34

14/2/2007 short@$36

28/2/2007 long@$35

9/3/2007 short@$37

20/3/2007 long@$36

21/3/2007 short@37

28/3/2007 [email protected]

10/4/2007 [email protected]

These signals are generated using two neural network models with an accuracy of 90.7% Good luck with your trading.

Well lotsofloot, what is your opinion of MCHP now? It's at a critical juncture now, something will have to give, one thing is certain, a buyer from $31 surely cannot hope, wish & pray his way to profits. The bears are putting up a stiff fight again at those highs, the immediate picture points to either a trading range between $38 - $35 or a push higher, as long as bulls do not relinquish their authority above $35, it's advantage bulls. The chart with commentary might help you.

 

[qwerty1]

Do you recall this quote lotsofloot?: "The main drawback with using nn models is that they can suddenly stop producing valid trading signals." In other words if a system goes down, a trader goes down with it. Many traders who depend upon a system typically do not understand the underlying current or root cause on why markets are moving. I've seen it many times before, they are often buying & selling at the worst possible times. Then they're left licking their wounds wondering what went wrong.

Some begin to lose confidence in their system, especially after taking a number of big hits, then they move on to the next system. The trader then reasons: "ah, ha, but this time it will be different, my next system will make me that star trader I've always dreamed of", at least that's what marketers want you to believe. And when profits don't materialize, what is the marketer's response? "but we did not guarantee future profits." I understand how a trader may want to use a system to scan stocks, due to time constraints & such but the real answer as to why markets are moving will always remain elusive. I've put system traders to the test before by asking them what their opinion was of a certain stock, such as where it was headed in the short term or long term? where should they take partial profits? etc... When we reviewed the results months later, everyone of them was off the mark, their profit targets were extremely small & exited unusually quick to ensure profits, but ironically held on to big losers, they didn't know from where the bulls or bears will strike from, much less in advance like you can with price, in summation, they cannot see or understand the battle that is occurring between bulls & bears. The markets are like the sea & the system trader is like a rubber duck who takes a pounding.