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Hi Jim,
Always love to read your comments.
The ideas are pretty consistent.
And I "smell" your wrestling with moneymanagement. (How much (%) in shares,
how much (%) in this specific stock. Shall I go big into this one or shall I
scale in. Take all profits/loss or scale out? etc.)
Admire your guts, especially your taking long positions in what "everybody"
percepts as a downmarket. You must really trust yourself and your
indicators. I like that.
You wrote: "a typical Equivolume reversal pattern"
Please explain...
And please put me on your list.
Trade cool,
Frans
At 13:53 12-09-98 -0400, you wrote:
>All,
> The market did move up yesterday and I did open my DELL position at 56
3/8. So far so good, now if it will just follow through <G>. I took a long
look at the indices last night and they are acting right for my theory. To
expand it a little, I believe the DJIA is trying to set up a volatile
sideways or horizontal channel trading range between 7500 and 8000. The
DJIA is not near the bottom of any of my trend channels but both the OEX and
SPX are bouncing off the bottom of long term channels. There is , however,
some support for the DJIA near 7500 from the Jan lows and resistance above
8000 from last falls highs. Looking at the daily action, the DJIA has
tested the 7500 level three times in the last two weeks so it does look like
a bottoming action. With the volatility we have seen, I fully expect
another test of the 8000 level soon. However, this is still a somewhat
tenuous theory and a long way from reality. I will commit to positions to
play the theory, but want to do so more cautiously then usual with very
close stops. That means any stock I pick must be close to the bottom of the
channel since I set my stops under the channel and preferable has just
bounced up a little. Also I'm only going to play the large market leaders
in groups I'm interested in.
> Even with the large DELL position and my normal size RDC position, I'm
still over 50% cash and want at least one more position to play the bounce
I'm hoping for. I think the brokers and financial service groups have been
over punished and over sold lately so that's the group for this weeks pick.
I narrowed my list to Schwab and Travelers Group (TRV) and decided on TRV
since it is so over sold and since Sandy Weill always bounces back. I only
wish I had ridden his coat tails more in the past <G>. TRV is going to be
the true financial services giant when the merger with Citicorp is completed.
> TRV at 40 7/8 broke out of a Short Term Down Trend Channel Friday on
good volume. It's also in a Long Term Up Trend Channel (LTUTC) with the top
at 80 3/8 and the bottom at 38. It peaked at 73 3/8 on 4/6/98 and then went
into a four month CANSLIM cup type formation but failed to breakout in Jul
and then went into a tail spin to a low of 36.4375 Friday morning before the
good up move. Looking at the chart, the last week shows a typical
Equivolume reversal pattern with TRV bouncing off the bottom of the LTUTC
twice on high volume. It closed at the lows on the first bounce, but closed
at the highs yesterday. The Support/Resistance and CMO indicators look like
the beginning of a reversal pattern. The fundamentals are better than ever
with the PE at 12.1, price/sales at 1.1, return on equity at 17.5%, 5 yr.
revenue growth rate at 49% and 5 yr. earnings growth rate at 19%. TRV just
kept growing while the stock price dropped. That's why I think it's so over
sold and such a bargain right here. I'll take a long position at Monday's
open, set my target just under the top of the LTUTC at 80 and my mental stop
just under it at 37 3/4. I'd like to hang on to this one as a long term
core position if it will let me so I'll wait until a good short term up
trend channel forms before moving my stop up to it.
> I'm sending a TRV.GIF chart to everyone on my email chart list. If
you're not on the list, and want on, just yell.
>
>Jim
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><DIV><FONT color=#000000 size=2>All,</FONT></DIV>
><DIV><FONT color=#000000 size=2> The market did
move up
>yesterday and I did open my DELL position at 56 3/8. So far so good, now
>if it will just follow through <G>. I took a long look at the
>indices last night and they are acting right for my theory. To expand
it a
>little, I believe the DJIA is trying to set up a volatile sideways or
horizontal
>channel trading range between 7500 and 8000. The DJIA is not near the
>bottom of any of my trend channels but both the OEX and SPX are bouncing
off the
>bottom of long term channels. There is , however, some support for the
>DJIA near 7500 from the Jan lows and resistance above 8000 from last falls
>highs. Looking at the daily action, the DJIA has tested the 7500 level
>three times in the last two weeks so it does look like a bottoming
action.
>With the volatility we have seen, I fully expect another test of the 8000
level
>soon. However, this is still a somewhat tenuous theory and a long way
from
>reality. I will commit to positions to play the theory, but want to
do so
>more cautiously then usual with very close stops. That means any stock I
>pick must be close to the bottom of the channel since I set my stops under the
>channel and preferable has just bounced up a little. Also I'm only going
>to play the large market leaders in groups I'm interested in.
></FONT></DIV>
><DIV><FONT color=#000000 size=2> Even with the large
>DELL position and my normal size RDC position, I'm still over 50% cash and
want
>at least one more position to play the bounce I'm hoping for. I think
the
>brokers and financial service groups have been over punished and over sold
>lately so that's the group for this weeks pick. I narrowed my list to
>Schwab and Travelers Group (TRV) and decided on TRV since it is so over
sold and
>since Sandy Weill always bounces back. I only wish I had ridden his coat
>tails more in the past <G>. TRV is going to be the true financial
>services giant when the merger with Citicorp is completed.</FONT></DIV>
><DIV><FONT color=#000000 size=2> TRV at 40 7/8
broke out
>of a Short Term Down Trend Channel Friday on good volume. It's also in a
>Long Term Up Trend Channel (LTUTC) with the top at 80 3/8 and the bottom at
>38. It peaked at 73 3/8 on 4/6/98 and then went into a four month
CANSLIM
>cup type formation but failed to breakout in Jul and then went into a tail
spin
>to a low of 36.4375 Friday morning before the good up move. Looking
at the
>chart, the last week shows a typical Equivolume reversal pattern with TRV
>bouncing off the bottom of the LTUTC twice on high volume. It closed at
>the lows on the first bounce, but closed at the highs yesterday. The
>Support/Resistance and CMO indicators look like the beginning of a reversal
>pattern. The fundamentals are better than ever with the PE at 12.1,
>price/sales at 1.1, return on equity at 17.5%, 5 yr. revenue growth rate at
49%
>and 5 yr. earnings growth rate at 19%. TRV just kept growing while the
>stock price dropped. That's why I think it's so over sold and such a
>bargain right here. I'll take a long position at Monday's open, set my
>target just under the top of the LTUTC at 80 and my mental stop just under
it at
>37 3/4. I'd like to hang on to this one as a long term core position
if it
>will let me so I'll wait until a good short term up trend channel forms before
>moving my stop up to it. </FONT></DIV>
><DIV><FONT color=#000000 size=2> I'm sending a TRV.GIF
>chart to everyone on my email chart list. If you're not on the list, and
>want on, just yell.</FONT></DIV>
><DIV><FONT color=#000000 size=2></FONT> </DIV>
><DIV><FONT color=#000000 size=2>Jim </FONT></DIV></BODY></HTML>
>
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