Non-Technical Multiple Signals
It
is always better to enter a trade after confirming the validity of a
signal. If you are a breakout player, you need to verify that the breakout
accompanies strong volume. In other words, multiple signals increase your chance
of winning.
Today, I want to talk about a different kind of multiple signals. This has
nothing to do with technical indicators. Before the open, I noticed JDS Uniphase
(
JDSU |
Quote |
Chart |
News |
PowerRating) was downgraded by four well-known brokerage houses. Wachovia
Securities and SG Cowen reduced JDSU’s rating to neutral from buy. CS First
Boston cut the rating from buy to hold, and ABN AMRO from add to hold. Well,
this looked like a multiple sell signal to me, so I decided to watch the stock.
Yesterday (6/14/01), JDSU closed near its 52-week low, and the red horizontal
line on the chart below indicates yesterday’s low. The stock gapped down on
the open, as expected. Volume was extremely heavy. In the first hour alone, JDSU
traded more than half of its daily average volume. Maybe this was the selling
climax. At 10:25 a.m., JDSU broke out above its intraday down trendline.
Needless to say, this was a buy entry point.
After the second breakout
above yesterday’s low at 11:20 a.m., the stock began to consolidate. Nothing
really happened till the closing moment. This was the third breakout. Can this
upward move carry over to Monday’s session?
Anyway, have a nice
weekend.
Eddie
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