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At 10:36 PM -0400 5/16/99, Neal Chabot wrote:
>I also wish that you would give an example of how characteristics
>specific to a particular market can be the basis of a trading system.
Examples might include:
- Tops seem to occur about every "X" bars. They are more regular in
some markets and more apparent at certain bar compressions.
- Prices tend to move up after a "V" shaped bottom (price got too low
so some big player stepped in to change the trend).
- Prices seem to increase when they cross over the 50-day and/or
200-day moving average (because many mutual funds use these points
as decision points).
- Prices tend to bounce off of "support and resistance" lines (trend
lines or Fib lines, previous pivots, etc., because people think
these are turning points and make it self fulfilling.)
- The trading floor or the NYSE specialist tends to run stops before
a change in direction causing a short countermove before a major
move.
- Prices follow well known patterns such as breaking below ascending
triangles, etc. because lots of people follow these patterns and
make them self fulfilling.
- If Dell changes direction, Gateway is likely to follow.
You need to search for these in historical data. There are hundreds of
them. Some are more prevalent in some markets than in others.
Bob Fulks
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