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|This bulletin was published on Sunday,
Nov 26, 00 just for you.
Past Weekly Bulletins
7 old Rollers AOL, GEMS, IATV, JNOT, NETA, SEM, and VSH were dumped from the List and carted off to the proverbial cornfield. The 11 new Rollers, sponsored this week by the letter “M”, should prove to be a bit higher in quality, that is, if history repeats itself. The Rollers pulled out of the Random Symbols batch are now being scrutinized harder than in the past. When searching for new stocks to add to our List of Rollers, all are initially looked at on a three-month out chart. If they appear to have what it takes the stocks are further ran on a six, and finally a one-year out chart. The ones that look like they have had a reasonably good rolling pattern are then subject to placement on the List as one more of our many desirable Rollers.
Here are three of the eleven choosen stocks have just been added to the RS100…
MCCC – Buy @13., Sell @16.
MNDO – Buy @8., Sell @13.
MZ – Buy @13., Sell @16.5
To see the rest you’ll have to slip over to the List of Rollers.
Also, take a look at MU & MVSN -
In the RS100’s quest for more Rollers the symbols MU & MVSN were uncovered. Although, neither is really what we look for in a classic Rolling Stock, it’s recommended that you check out their fundamentals. Both have fallen from great heights down to the 30’s and 40’s and look like they may be contemplating a climb backup the ladder. Check them out and see what you think – I for one did not do any research on them, just thought their charts looked intriguing and wanted to pass them on to you.
Viewing our Roller’s chart’s at E*Trade…
These steps make for rather dry reading. If you already understand the process of running our Rollers at E*Trade just skip this portion and read on. A few RS100 members have commented that they don’t understand the process that’s been setup for running charts on all of our listed Rollers at E*Trade in one snap. Without ever going to http://rollingstock100.com/Password.html and logging into the List of Roller’s page, members can run charts in one simple step at E*Trade right from this Weekly Update.
1. At the bottom of the List of Rollers, included in this email, members will find all the stocks in one clump consisting of several rows.
2. While holding down the left button of your mouse, drag your cursor diagonally from the upper left corner down to the lower right corner of the rows of Rollers, and release.
3. Right click on the now highlighted stock symbols and left click on “copy” in the small window that opens.
Okay… So far so good?!
4. Now click on the text link that’s located right by the symbols that you’ve just copied with your cursor. The link looks this http://www.etrade.com . This link will take to E*Trade’s home page.
5. At the very top of E*Trade’s home page you’ll see a small “Quotes” window. Right click inside of this window and left click on the word “paste” from the little menu that appears. Now click the button to get the quotes. (You have to run the quotes before you can run any charts.)
6. Clicking the quote button will bring you to yet another page where all of the quotes will be laid out for you. On this page, next to the quote window, you’ll see a drop-down menu… open it and click “chart”. All the charts will now be displayed for you on down the page. Scroll down to view them.
That’s it! Now you can run any variety of charts you want, from 1 day to 5 years out. Actually you can run charts on our stocks at any website that offers charts. However, most won’t accept more than 1 to 10 symbols at a time. For example, this won’t work at http://www.bigcharts.com because you can only run one chart at a time.
If the way this explanation was written sounded like you were being talked down to please except my apologies. There are several members who have really had a problem with this and an obvious attempt was made here to break it all down to as simple a set of steps as possible. Not all of us are familiar with what some of us take as common place, like the “copy” and “paste” process.
On with the show…
Would you like to know which way is the market moving? How far up or down will it go? And when will it go the other way? These are the basic concerns of the technical analyst. Behind the charts and graphs and mathematical formulas used to analyze market trends are some basic concepts that apply to most of the theories employed by today's technical analysts.
John Murphy, a leader in technical analysis of futures markets, has drawn upon his thirty years of experience in the field to develop ten basic laws of technical trading: rules that are designed to help explain the whole idea of technical trading for the beginner and to streamline the trading methodology for the more experienced practitioner. These precepts define the key tools of technical analysis and how to use them to identify buying and selling opportunities.
Mr. Murphy was the technical analyst for CNBC-TV for seven years on the popular show "Tech Talk" and has authored three best-selling books on the subject --Technical Analysis of the Financial Markets, Intermarket Technical Analysis and The Visual Investor.
His most recent book demonstrates the essential "visual" elements of technical analysis. The fundamentals of Mr. Murphy's approach to technical analysis illustrate that it is more important to determine where a market is going (up or down) rather than the why behind it.
The following are Mr. Murphy's ten most important laws of technical trading:
Law #1 - Map the Trends
Study long-term charts. Begin a chart analysis with monthly and weekly charts spanning several years. A larger scale "map of the market" provides more visibility and a better long-term perspective on a market. Once the long-term has been established, then consult daily and intra-day charts. A short-term market view alone can often be deceptive. Even if you only trade the very short term, you will do better if you're trading in the same direction as the intermediate and longer term trends.
Law #2 - Spot the Trend and Go With It
Determine the trend and follow it. Market trends come in many sizes -- long-term, intermediate-term and short-term. First, determine which one you're going to trade and use the appropriate chart. Make sure you trade in the direction of that trend. Buy dips if the trend is up. Sell rallies if the trend is down. If you're trading the intermediate trend, use daily and weekly charts. If you're day trading, use daily and intra-day charts. But in each case, let the longer range chart determine the trend, and then use the shorter term chart for timing.
Law #3 - Find the Low and High of It
Find support and resistance levels. The best place to buy a market is near support levels. That support is usually a previous reaction low. The best place to sell a market is near resistance levels. Resistance is usually a previous peak. After a resistance peak has been broken, it will usually provide support on subsequent pullbacks. In other words, the old "high" becomes the new "low." In the same way, when a support level has been broken, it will usually produce selling on subsequent rallies -- the old "low" can become the new "high."
Law #4 - Know How Far to Backtrack
Measure percentage retracements. Market corrections up or down usually retrace a significant portion of the previous trend. You can measure the corrections in an existing trend in simple percentages. A fifty percent retracement of a prior trend is most common. A minimum retracement is usually one-third of the prior trend. The maximum retracement is usually two-thirds. Fibonacci retracements of 38% and 62% are also worth watching. During a pullback in an uptrend, therefore, initial buy points are in the 33-38% retracement area.
Law #5 - Draw the Line
Draw trend lines. Trend lines are one of the simplest and most effective charting tools. All you need is a straight edge and two points on the chart. Up trend lines are drawn along two successive lows. Down trend lines are drawn along two successive peaks. Prices will often pull back to trend lines before resuming their trend. The breaking of trend lines usually signals a change in trend. A valid trend line should be touched at least three times. The longer a trend line has been in effect, and the more times it has been tested, the more important it becomes.
Law #6 - Follow that Average
Follow moving averages. Moving averages provide objective buy and sell signals. They tell you if existing trend is still in motion and help confirm a trend change. Moving averages do not tell you in advance, however, that a trend change is imminent. A combination chart of two moving averages is the most popular way of finding trading signals. Some popular futures combinations are 4- and 9-day moving averages, 9- and 18-day, 5- and 20-day. Signals are given when the shorter average line crosses the longer. Price crossings above and below a 40-day moving average also provide good trading signals. Since moving average chart lines are trend-following indicators, they work best in a trending market.
Law #7 - Learn the Turns
Track oscillators. Oscillators help identify overbought and oversold markets. While moving averages offer confirmation of a market trend change, oscillators often help warn us in advance that a market has rallied or fallen too far and will soon turn. Two of the most popular are the Relative Strength Index (RSI) and Stochastics. They both work on a scale of 0 to 100. With the RSI, readings over 70 are overbought while readings below 30 are oversold. The overbought and oversold values for Stochastics are 80 and 20. Most traders use 14-days or weeks for stochastics and either 9 or 14 days or weeks for RSI. Oscillator divergences often warn of market turns. These tools work best in a trading market range. Weekly signals can be used as filters on daily signals. Daily signals can be used as filters for intra-day charts.
Law #8 - Know the Warning Signs
Trade MACD. The Moving Average Convergence Divergence (MACD) indicator (developed by Gerald Appel) combines a moving average crossover system with the overbought/oversold elements of an oscillator. A buy signal occurs when the faster line crosses above the slower and both lines are below zero. A sell signal takes place when the faster line crosses below the slower from above the zero line. Weekly signals take precedence over daily signals. An MACD histogram plots the difference between the two lines and gives even earlier warnings of trend changes. It's called a "histogram" because vertical bars are used to show the difference between the two lines on the chart.
Law #9 - Trend or Not a Trend
Use ADX. The Average Directional Movement Index (ADX) line helps determine whether a market is in a trending or a trading phase. It measures the degree of trend or direction in the market. A rising ADX line suggests the presence of a strong trend. A falling ADX line suggests the presence of a trading market and the absence of a trend. A rising ADX line favors moving averages; a falling ADX favors oscillators. By plotting the direction of the ADX line, the trader is able to determine which trading style and which set of indicators are most suitable for the current market environment.
Law #10 - Know the Confirming Signs
Include volume and open interest. Volume and open interest are important confirming indicators in futures markets. Volume precedes price. It's important to ensure that heavier volume is taking place in the direction of the prevailing trend. In an uptrend, heavier volume should be seen on up days. Rising open interest confirms that new money is supporting the prevailing trend. Declining open interest is often a warning that the trend is near completion. A solid price uptrend should be accompanied by rising volume and rising open interest.
Technical analysis is a skill that improves with experience and study. Always be a student and keep learning.
In case the links in Mr. Murphy’s Tech Laws aren’t working for you the information that they refer to is located at http://StockCharts.com . StockCharts.com is a wonderful source for financial charts, analysis, tools and investor education. Everything here is totally free and open. No registration, no log ons, no member-only areas.
Have a Terrific Week!
If you'd like to view the past Weekly Bulletins, there are a variety of places to go. Take you're pick! You'll find they're easily accessible for your viewing at Delphi Forums, RS100's Premium Board, Yahoo! Clubs, MSN Clubs, The Motley Fool, Lycos Clubs, and The Raging Bull.
I know what your thinking... What idiot?! Would have seven different message boards for their web site and post the identical information on each!? Well the answer is simple...LLH that's who :-0) If you've read this far you're probably expecting to stumble upon my reasoning for this about now? So here it is: each of my message boards are located in popular "communities" catering primarily to the financially minded web surfer. When one of these investing voyagers of the net drift onto one of the RollingStock100 message boards, the inclination is to click over and check out the web site that's sponsoring it...namely this one, RollingStock100.com! It's just a method of attracting future members by giving them a trail of bread crumbs to follow.
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