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Guy,
A friendly warning, I've been burnt in the past trading long positions in
down trend channels. I no longer trade long positions in down trend channels.
I've taking the advice that "The trend is your friend" to heart. I only
trade channels in the direction of the trend and also like the trend I'm
trading to be in the direction of the next longest trend. That is I'll trade
a short term up trend with a long position from the bottom to the top of the
channel. I'll either cover at the top of the channel or sell covered calls if
the intermediate term trend is also up. I will bottom fish on horizontal
channels or down trend breakouts. For down trend channels, I will only trade
short positions from the top to the bottom of the channel.
That doesn't necessarily mean I'm right, but it works for me <G>. Best
of luck if you do take the trade.
Jim
-----Original Message-----
From: Guy Gordon
Sent: Friday, May 16, 1997 3:22 PM
To: MetaStock-List@xxxxxxxxxxxxx
Subject: PAIR near bottom of channel
PAIR fell 17% today when Soundview Financial said nasty things about
Pairgain. Strangely enough, "SoundView analyst Chandan Sarkar said he
has become more cautious on PairGain but has not changed the rating or
earnings estimates. " =20
See http://biz.yahoo.com/finance/97/05/16/adtn_pair_1.html
PAIR had been rising steadily for two years until last October. Then
it fell, went sideways, and climbed back to re-test the Oct high in
January. It made a double top in February, and then started a
downtrend channel. It has dropped from $42 to $17, and the PE is
still a high 36.
This is not a stock I would be in for the long-run right now. But it
might make a good channel trade.
The top of the channel is defined by the highs of 2/14, 4/7, 4/9, and
5/9. The bottom of the channel is defined by the lows of 1/16 and
3/19.=20
Today, the bottom of that channel is at 16 3/4. PAIR hit 17 1/8
today. I am very tempted to buy at this level Monday. But I'm
worried by how fast PAIR came down. It may overshoot next week.
Any opinions out there?
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