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That makes perfectly good sense. Besides minimizing risk, there is
more money to be made trading in the direction of the trend. To move
in the opposite direction of the trend, a stock need merely go
sideways. To reach the top of an uptrend channel, the stock must
really climb.
As for PAIR, I may buy it if it starts to rise again, and the
fundamentals look good. High speed data lines are in big demand.
On Sat, 17 May 97 15:31:14 UT, Jim wrote:
>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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