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Hi Jim,
I got into AOL on Wed. 8/5 at the same 111 level. Fortunately, I didn't get
to experience the heart attack of watching it plunge to 97.5 shortly
thereafter since I was sound asleep. Living 13 time zones away has its
trading advantages :-)
FYI, I use Maximum Adverse Excursion to determine my Stop Loss levels.
However, its suggested stop of 103 put it well outside my money management
guidelines. Luckily implied option volatility was at a peak that day and I
was able to take some nice premium selling covered calls that allowed me to
still take the trade and juice my upside too.
I guess my question is, how do you work a nearly a 15% drop from 111 to your
stop of 96.75 under your money management rules?
very curious,
Rick
-----Original Message-----
From: Jim Greening <JimGinVA@xxxxxxxxxxxxx>
To: Metastock <metastock@xxxxxxxxxxxxx>
Date: Sunday, August 09, 1998 3:57 AM
Subject: Weekly Pick
> AOL at 111.875 is in a long and intermediate up trend and just
>broke out of a Short Term Down Trend Channel (STDTC). The top of the
>ITUTC is at 150 and the bottom is at 97. It hit an all time high of
>140 1/2 on 7/21/98 and then pulled back to the bottom of the ITUTC
>during the day Wednesday. From their it started back up and broke out
>of it's STDTC on good volume Friday. The indicators support my theory
>that a short term trend change is in progress. This is a pure
>momentum play on an internet stock so, as expected, the Price/Sales is
>extremely high at 10.94. The rest of the fundamentals look good with
>Debt/Equity of 0.84, 27% insider ownership, actual earnings this year,
>and five year average annual growth of over 100% and this years
>revenue growth still over 50%. I'll set the target just under the top
>of the ITUTC at 149. I'll set the initial stop just under the bottom
>of the ITUTC at 96 3/4. Once there is enough data for a good Short
>Term Up trend Channel (STUTC), I'll move the stop up to under it.
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