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All,
We didn't get the good week I was hoping for. My portfolio was down a
little and I was stopped out of AOL and CPU Friday. Then when I looked at
the charts last night, I saw it was time to raise my stop on FLC and FLC was
trading below that higher stop price, so I'll close FLC Monday. Looking at
the indices I follow, almost all are in a sideways move or Horizontal
Channel. Also most are near the bottom of that channel, so either they will
turn up or break through the bottom. I'm going to move slow until the
direction is clear.
I think the best strategy at this point is to stick with groups I like
and try to find stocks that are being pressed into corners of triangles
formed by the top of a short term down trend channel and the bottom of a
longer up trend channel. Then place buy stops just above the top of the
down trend channel and keep them in place as long as the stock doesn't drop
through the bottom of the longer up trend channel. Since I just closed AOL,
I'd like some thing in the internet group and New Era of Networks (NEON)
fills the bill nicely.
NEON at 39 5/8 is being compressed into the corner of an ascending
triangle formed by the top of a Short Term Down Trend Channel (STDTC) from
the 06/07/99 high and the bottom a longer Short Term Up Trend Channel
(STUTC) from 04/29/99 low. It will have to break out of one of them some
time in the next few weeks and I'm hoping the up trend will hold. NEON set
an all time high of 78 3/8 just a couple of months ago then fell all the way
to a low of 34 at the 04/29/99 low. Since then it has been very volatile
with large up and down moves within the wide STUTC. Right now the top of
the STUTC is at 56 1/4 and the bottom is at 37 3/4. It has been approaching
the bottom of the channel fairly rapidly while the Tema QStick continues to
rise from a negative peak. Also the Tema Binary wave has been barely
positive and flat. This indicates to me that the bottom will hold and we
can expect NEON to turn up soon. The fundamentals are typical of an
internet stock with meager earnings, but large revenue growth. I'm going to
set a buy stop just above the top of the STDTC at 46 7/8. I don't really
expect it to get hit for several days and I'll reduce it every day to just
above the top of the STDTC until it gets hit as long as the stock stays
above the bottom of the STUTC.
Hope that's not too confusing <G>. It's much clearer when you are
looking at the chart. I'm sending a NEON.GIF chart to everyone on the email
chart list.
JimG
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