Skiracer's stock slopes

[Tatnic]

FWIW, I'm short this one with the 40 level acting as the pivot...ie if it breaks back above I'll cover. To be honest, when I look at the chart now I'm not sure why I was so excited about the short to begin with (other than the failure at $40). I try to keep a few shorts on hand but its not easy finding profitable ones in this market environment.

I know why now. Because now that I look at it its doing just what I saw initially. The second time I checked Stock Charts had bad data. This has been happening more and more lately and I've found myself double checking alot of their data on their charts. Just a heads up out there...and it should be a heads up to stock charts to get thier shit together or they'll lose a ton of customers.

Anyway, its a short (KOMG) as long as it stays below the descending 40 week.

[billyjoe]

Aapl

I would have sold AAPL today had I checked when it was 83.62. Didn't realize it dropped that far. No mechanical stop in place.

----------billyjoe

[skiracer]

I just caught the name of our newest memeber. You have to love this name. Barbiepussy. Welcome aboard MS Pussy.

[skiracer]

Still not enough strength to get up but I saw something in the daily that is intriguing and could make sense. I see a completely different read on the weekly. I'm still holding the short play but am ready to cover the short position on the possibility of a strong 5th wave up on the daily. In that case I would look for an entry in the 5.75/5.80 range. The weekly still gives off plenty of room for the short play to evolve. Here are both charts.

[peanuts]

Relative Strength

Microsoft had an RSI in the 90's during the time it tripled in one year. Would you say that it was overbought?

RSI is an indicator of how a stock is performing relative to some kind of benchmark... Personally, I've never used it as an indicator of a stock being oversold or overbought. I know some people do, and it may even work for them, but I'd hate for someone to miss out on a Microsoft of the future because they thought that the stock was overbought if the RS value was in the 90's.

E=MC^2

[skiracer]

Microsoft had an RSI in the 90's during the time it tripled in one year. Would you say that it was overbought?

RSI is an indicator of how a stock is performing relative to some kind of benchmark... Personally, I've never used it as an indicator of a stock being oversold or overbought. I know some people do, and it may even work for them, but I'd hate for someone to miss out on a Microsoft of the future because they thought that the stock was overbought if the RS value was in the 90's.

E=MC^2

Like any style, discipline, or strategy the items that go into making it a working system for the individual may or may not work for everyone in the same fashion. I don't base alot of my decision making process on any of the indicators I like to use as the default setup on my charts but they provide me with some base along with a number of other factors that go into my interpretation and decision making process. The Relative Strength Index is just a gauge of how a stock is performing relative to the relative strength index. No stock will ever stay above the 70 line (overbought) or below the 30 line (oversold) forever. Just knowing a stock is either above or below the 70 or 30 lines can prompt you to keep an eye out for a move in a specific direction based on that indicator. That's how I use it and you must realize that nothing is written in stone. Regarding Microsoft and how it performed an under what circumstances it performed is only pertinent to Microsoft and that was in the past. I live and trade in today's market environment giving consideration to what the stock has been doing in the short term past and what I consider possible in the short term future. What happened months or years ago has no bearing on my decision process except if I were to recognize a specific chart pattern forming that is similar to one that took place months or years ago and might provide a similar result.
Everyone should develop their own style and whatever facets go into making it a viable system or style for them will eventually evolve into what it is that works for them. If anyone misses out on a play because of what I post regarding my interpretations and strategys is their responsibility and problem. Everyone should do their own DD and anyone that doesn't or is to lazy to do it for themselves is foolish and leaving themselves open to losing their money which is no fault of mine because of anything that I write or indicate.
But the proof is in the results and the results are usually indicative of the trader and their strategys. When someone is continously making gains and profits then those strategys in play have to be working. That's why I like to provide the chart and the annotations explaining my feelings about the chart so that anyone reading it can decipher why I feel the way I do and perhaps learn something in the process that they might apply to their developing strategys in a positive fashion for themselves. I think that is what it is all about but each individual has to take all this info and put it to good use for themselves and their strategys or not.

[skiracer]

Microsoft had an RSI in the 90's during the time it tripled in one year. Would you say that it was overbought?

RSI is an indicator of how a stock is performing relative to some kind of benchmark... Personally, I've never used it as an indicator of a stock being oversold or overbought. I know some people do, and it may even work for them, but I'd hate for someone to miss out on a Microsoft of the future because they thought that the stock was overbought if the RS value was in the 90's.

E=MC^2

This would be an easy experiment or lesson to apply to the RSI. Scan for stocks that are currently above the 70 line (overbought) and for stocks that are currently below the 30 line (oversold) and see how long it takes them to move back down below the 70 line or back above the 30 line from the time they first came onto your scans. Would you be able to develop a number of successful trades off that alone? In the MAMA short play the RSI was way into the overbought area above the 70 line and if you look at the chart it came way down to below the 70 line for close to a 2 point move from my entry when it was way above the 70 line. My decision to short MAMA came from a number of different facets that were all integrated into the successful decision making process. The RSI being one of the facets.

[Tatnic]

Regarding Microsoft and how it performed an under what circumstances it performed is only pertinent to Microsoft and that was in the past. I live and trade in today's market environment giving consideration to what the stock has been doing in the short term past and what I consider possible in the short term future. What happened months or years ago has no bearing on my decision process except if I were to recognize a specific chart pattern forming that is similar to one that took place months or years ago and might provide a similar result.

Boy...I remember like it was yesterday when msft broke out in the late 90's..(maybe it was fall of 99) over $85, after basing for about half a year. It was near the end of options exp. so I bot a bunch of cheap calls slightly out of the money and made a 10 bagger in a couple of day's time. Those were the good old days...until they weren't.

I see a similar chart unfolding right now...LEH. If it can close at or above 78 tomorrow, it could do a moon shot...or it could sucker me into a big position only to pull the rug out from under me next week. That's what makes this living so exciting...and when the rewards come they are that much sweeter than a steady paycheck.

[Tatnic]

Boy...I remember like it was yesterday when msft broke out in the late 90's..(maybe it was fall of 99) over $85, after basing for about half a year. It was near the end of options exp. so I bot a bunch of cheap calls slightly out of the money and made a 10 bagger in a couple of day's time. Those were the good old days...until they weren't.

I see a similar chart unfolding right now...LEH. If it can close at or above 78 tomorrow, it could do a moon shot...or it could sucker me into a big position only to pull the rug out from under me next week. That's what makes this living so exciting...and when the rewards come they are that much sweeter than a steady paycheck.

I should add that an options trade like that can do more damage to one's trading psyche than anything imaginable. It's like a shot of herion, or so I would imagine. Best to trade options sparingly and only in the best of circumstances.

[skiracer]

I see a similar chart unfolding right now...LEH.

Tatnic,
That kind of answers my arguement for me. A similar chart pattern unfolding in LEH has prompted you to take a look and do some more DD on the stock. I bet the closer the pattern in LEH is to the MSFT chart will make all the difference in whether you make the play or not.

[Tatnic]

I see a similar chart unfolding right now...LEH.

Tatnic,
That kind of answers my arguement for me. A similar chart pattern unfolding in LEH has prompted you to take a look and do some more DD on the stock. I bet the closer the pattern in LEH is to the MSFT chart will make all the difference in whether you make the play or not.

I had LEH on my alerts for a while now but it hasn't closed above a level that I deem to be necessary for it to break out. That may happen today but to be honest I'd rather it not because I can sense that next week will be pretty bad. I'll probably wait until Monday to see what kind of mood the market's in. I'm not sure when the FED open market meets again in January, but this market has been tooling along happily thinking the FED will lower rates soon, and I suspect the FED will shock the markets next month.

[Tatnic]

This would be an easy experiment or lesson to apply to the RSI. Scan for stocks that are currently above the 70 line (overbought) and for stocks that are currently below the 30 line (oversold) and see how long it takes them to move back down below the 70 line or back above the 30 line from the time they first came onto your scans. Would you be able to develop a number of successful trades off that alone? In the MAMA short play the RSI was way into the overbought area above the 70 line and if you look at the chart it came way down to below the 70 line for close to a 2 point move from my entry when it was way above the 70 line. My decision to short MAMA came from a number of different facets that were all integrated into the successful decision making process. The RSI being one of the facets.

This is a good discussion on how to use RSI. My personal preference is to use it with weekly charts only, and I believe the most important level is the zero, or 50 line. I like to see a chart that is moseying along the 50 line, and then break out (or breakdown) and move higher, taking the rsi with it. But you can't use the RSI alone..it has to be in conjunction with moving averages. More often than not if you enter a position because the rsi is moving up, but the longer term (ie weekly) moving average is moving down, the moving average will win out and the breakout will be false.

I do agree with peanut that just because the rsi is high doesn't mean the stock is oversold. A high daily RSI reading is meaningless in my opinon. But a high weekly reading that drops below the 70 line is a yellow flag and may mean the trend has died out BUT even then it has to be backed up by violated trend lines or moving averages.

[skiracer]

Wishing everyone here a safe and prosperous New Year. Don't drink and drive and please make it back safely for the upcoming year here together. Looking forward to sharing ideas, setups, and commentary together this coming year. So don't do anything foolish tonight and get back safely to participate in the upcoming new year. God bless all of us.

[billyjoe]

Ski,
Happy New Year to You !! I'm home safe, partying done. Had one beer , 10 shrimp , and a few crackers.


-----------billyjoe

[mimo_100]

Happy New Year to everyone. Special thanks to MrMarket for all that he does on this forum.