April 11 Workshop
Why am I a trend
follower? Because for the most part any surprises tend to occur in the same
direction as the trend. You never know for certain when they will happen, but
you can get yourself in position to take advantage of them when they do take
place.
04-03-2002
11:58:42
Wendy’s (WEN)
is pulling back after its recent move higher. WEN is down 0.36 to 34.23 and
carries a
3-month relative strength rank of 82 from TradingMarkets.com.
The stock continues to make a nice move out of the pattern in
the three succeeding sessions. Note the strong closes each day.
Tuesday, the stock gaps to the upside on the open and does not
look back.
This is an example of why I scale out of positions as they
become profitable and use trailing stops on the rest of the shares, letting the
market take me out rather than arbitrarily exiting a swing trade. You will give
a little profit back by doing so, but in the long run you will find yourself
getting gifts like this one, once in a while.
Why are the majority of professional traders not in favor of a strategy of
buying "oversold" stocks and selling "overbought" equities? Because it is not
that simple and a good way to potentially lose a great deal of hard-earned
money. The equation is more complex than that, and extreme conditions have a way
of becoming more so. The trick is to take a look at the bigger picture.
09:28:15
While early indications are for a positive open, look for additional weakness
in the battered telecommunications sector ($XTC.X).
Nortel (NT)
has adjusted its Q1 outlook downward and Verizon (VZ)
has announced it will absorb 2.5 billion dollars of "goodwill" charges and other
investments, both of which could pressure the already weakened issues in this
area of the market. NT closed Monday at 3.58 while VZ closed at 44.21.
On Tuesday, both Nortel (NT)
and Verizon (VZ)
came out with bearish news, and the sector in addition to both of these stocks
had been battered in the last couple of weeks.
Since markets often test and retest prior lows and highs, the
news will likely provide the fuel to head back toward the February low.
Traders who paid attention were rewarded, as the stock drops
nearly 2 points intraday. Ignore the pundits crying "oversold" and "overbought".
While they are both valid conditions to be aware of, it is just not that simple.
When you combine positive news with bullish technicals, the opportunity to
cash in is there. What you have to do as a trader is have the confidence to step
up and make the trade. This afternoon’s alert on Polymedica (PLMD)
was a good example.
12:35:01
News
and Intraday Setup Alert
Polymedica (PLMD)
is breaking out on an expansion of range after an SEC inquiry has ended with no
enforcement action taken against the company. It is also pulling back from
its intraday high following a gap to the upside. PLMD is currently trading up
7.90 to 33.32 and has a
3-month relative strength rank of 95 from TradingMarkets.com.
Note the second part of the alert —
it is also pulling back from its intraday high following a gap to the upside.
This is where the nimble trader can take advantage as the momentum reasserts
itself.
The stock is up more than 4 points and still looks like it has
some steam left in it. Let us help you uncover opportunities such as this one,
and soon you will be spotting them more regularly.