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M.J.,
Here are a few ideas. I have been trading the Internet stocks for the
last 6 months and have been pretty successful. Here are some of my
suggestion: 1. Most important, use classical chart formation to find
potential candidates for breakout. Using oscillators or indicators (MACD,
RSI, Stochastics etc) usually will NOT work. Look at the charts and look
consolidation patterns that last from several days to possibly several
weeks. Once the stock breaks out to the upside, (I have not shorted any of
these, there is just too much risk), look to buy immediately after the
breakout. Set your stop just below the low of the previous day or several
days ago. 2. I have noticed that once an Internet stock breaks out, it will
usually run for approximately 3-4 days!!! At which point I begin selling
into that strength and use close stops. Examples. I bought ATHM at 173 on
the 7th and sold yesterday at 187 and 194. I will be looking to buy back
between 131 and 145 in the next few days. 3. Getting back to finding these
volatile stocks, I will be analyzing the charts and will look for stocks
that have had nice runs over the last few days to weeks and then find
previous highs on the charts which will now act as support zones. Or look
for Fibonacci retracement levels in addition to classical support zones to
find 'logical' areas were to buy some of these high flyers back. 4
Finally, use open GTC buy orders to get your order on the books. Because
in these fast markets, you will most like miss those support areas if you
follow more than just a few stocks at a time.
Here are some potential candidates in addition to the ATHM I gave above:
CMGI around 226-230, INKT between 95-106, BCST between 101-115, INSP
between 93-103 and NITE 65-80. I realize that some of these have pretty
big spreads but then again I am not trying to pick the exact bottom. Just
an area were I would have enough risk tolerance to again go long.
Hope this helps,
John Boggio
At 08:16 PM 4/14/99 EDT, you wrote:
>I would be interested in hearing any suggestions for day trading internet
>stocks or similar volatile stocks.
>
>I've been watching with interest the mania in internet IPOs. The volatility
>of these securities, even after the IPO is significant. I've been
tracking a
>group of internet stocks (most are unseasoned, less than 1 year since the
>IPO) and am amazed at the volatility. There are few/none that I would own
as
>an invest. They are for trading - - greater fool theory. Most have
>relatively thin volumes (part of the reason I'm not overly concerned about a
>crash in 'net sector bringing down the market - - most of these stocks only
>have a couple million shares of float - - compare that to a GE or Ford which
>have a a billion plus shares outstanding) and driven by investors psychology
>- - listen to the chat rooms, track volumes being traded via E*Trade (is
>there away to track orders intraday being place through E*Trade and other
>'net brokers).
>
>Anyway, I would like to hear others re: potential strategies for trading
>these - - keep it simple, nothing more complex than paper, pencil and data
>from the Yahoo, NASDAQ and web sites. I had a couple of thoughts - - for
>example, trading range breakouts, with increasing volume from the first 45 -
>60 minutes of trading (would be a litte nervous trading the short side),
with
>a multiple stops - - a time stop, trailing stop after specific profit
>objective (X% ave. daily true range).
>
>Any thoughts appreciated. If you have not thought about trading these
>securities/sector take a look at various "indexes" that track the sector - -
>most are up 80%+ for 52 wk.
>
>Also, are there any index securities, similar to Spiders or QQQ, which track
>the sector - - would eliminate the risk (reward) or individual security
>selection.
>
>Looking to get on the train and (more importantly) off the train before the
>other fools.
>
>M. J. Mueller
>
>
>
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