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As Richard Estes has pointed out, Walter Downs suggested looking at the trend
when considering Shark signals. Downs said the trend was up when the 5-day
simple moving average was above the 20-day SMA.
In the attached chart, the second window has a histogram showing when the
5-day SMA is above the 20-day SMA. (It's green when the trend is up.) As you
can see, the 5-day is above the 20-day now, but only marginally so. The
direction of the trend seems undecided right now. Compare this period to the
period in March when T was clearly ready for a reversal to the upside. T seems
a bit precarious right now.
There's strong resistance at 60 3/4, too, and I wouldn't buy until the stock
closes above that level. T's been struggling to overcome that resistance all
day. After that, the stock faces resistance at 63 3/4 and 65 1/2.
The arrows in the first window show Shark buy and sell signals regardless of
trend. As you can see, the sell signals aren't great. since the signals rely
on the appearance of the Shark pattern, I wouldn't expect them to be all that
frequent (or good). The Shark system does give the occasional good buy signal,
though. One way to weed out the good from the bad is to look at the trend.
By the way, the Shark system isn't the only one that gave buy signals for T
yesterday. The Bull/Bear System and parabolic SAR did, too. But as I said, I'd
wait to see whether the stock can close above 60 3/4.
Brooke
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