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Ron,
I don't think you understand what I'm doing. I got into IOM at 17 5/8
on 4/7/97 and am still in it. I set my target at 55 just under the 1996
high. I don't get out when the stock hits the top of the short term up
trend channel. Instead I protect the position with covered calls like I
did Friday. This is the third time I have done this since entering the
position. I made good profits on the calls both of the other times by
closing the call position when IOM fell back to mid channel. Time will
tell what happens this time <G>. Of course there is a chance that the
stock will continue to rise, break out of the channel, and I will get
called out of a good position. If that happens, I'll have a good profit
overall. Then I can recompute the channel and always get back in later, If
I want to. I'll copy a previous post on my strategy below. Yell if you
have any questions.
I've been watching CHPS also. I see the head and shoulders pattern,
but still have it in a down trend channel. It touched the top of that
channel Thursday, but pulled back Friday. I'll be interested when/if it
breaks the down trend channel.
Jim
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Guy,
I also prefer hand drawn channels using Trader Vic's trend line
drawing
methodology. That's all I use for intermediate and long term trends.
However, if you use that methodology for short term trends that haven't had
time for a couple of highs and lows, you will almost always get stopped out
during normal movement as the first highs and lows are made. To get around
this problem I use Raff Regression Channels for short term channels only
since
they tend to be more forgiving.
The problem is trying to tell where to set your channel start and end
point. For new Short Term Up Trend Channels (STUTCs), the start is easy.
Set
the start at the low just proceeding the down trend channel breakout and
don't
ever move it. After at least one new good low has been set and a following
high has been set that is higher than the high just before the new low, set
the right side of the channel at the new high and extend the channel to the
right. Anytime a new high is made, stretch the channel to the right to
include the new high. Do not stretch the channel anytime the close is not
a
new closing high.
Once the trend channel is drawn, trend channel trading is simple. For
up
trend channels, buy when the stock has just bounced off the bottom of the
channel. Set your target just below the top of the channel. Set your stop
just under the bottom of the channel. Vice versa for a down trend channel
and
a short position.
One change I'm in the process of trying applies to new STUTCs. I draw
the new channel as described above. I may have bought when a short or
intermediate term down trend was broken. If that was the case, I'd set the
target just under the old high and the stop just under the old low and not
change it until I had enough data for the new STUTC. I will only have
bought when there is an intermediate or long term up trend channel already
in existence. I'll set my target based on that
intermediate or long term trend. After the new STUTC is established, I'll
move my stop to just under that STUTC, but will keep my target based on the
longer term trend channel. Whenever, the stock hits the top of the STUTC,
I
won't close the position, but will sell covered calls to protect it as I
did
with IOM today. I'll buy the calls back when the stock reacts back to the
middle of the STUTC. If the stock continues to rise, I'll let the stock be
called.
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> From: RonLaw7@xxxxxxx
> To: metastock-list@xxxxxxxxxxxxx
> Subject: Re: IOM & SCH
> Date: Saturday, July 19, 1997 2:50 AM
>
> Jim, I've read your posts, and your one of the best contributors to this
> group. I trade stocks too, but don't use the channel method you
obviously go
> by. I have one question, since I've watched some of your trades, and
noted a
> recent comment about IOM - which I am still long. Your quick in and out,
I
> might think, could possibly prevent you from getting some real good
moves.
> I've done this myself. I hit WLA at 99, in a great call, but sold 1/2
of my
> position at 106 and the other at 118 - immediately before it took off to
140.
> I was afraid of losing the profit, and took any candlestick pattern that
> looked at all suspicious, as my exit card. I mean it's great to catch
every
> signle little move in a stock. But, you've got to be almost clairvoyant
to
> do so. I raise the point since IOM still looks good and I'm trying to
hang
> in there for the larger move. Also, take a look at CHPS - I've been
waiting
> for this baby to base and break out for a few months, and almost sold it
10
> different times due to impatience. It has broken out, and formed a good
H&S
> bottom. It's had the living crap beaten out of it for 5 to 8 months, so,
> maybe a good move is starting.
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