Re: [CANSLIM] Market psychology

From: "Patrick Wahl" <pjwahl@attbi.com>
Subject: Re: [CANSLIM] Market psychology
Date: Wed, 24 Jul 2002 12:00:47 -0600

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I look for bounces back to shorter length MA's, a commonly used moving average is 
a 20 period EMA, but I think a 50 can also work, just different styles  Look at EXPE 
for a good recent example of how this would work, you can see it sold off, so it was 
already in a bit of a downtrend, then bounced back up to the 20 period and sold off.  
Your risk is just a point or two above that MA.  These are short term technically 
based trades, not based on deteriorating fundamentals or anything.

Hindsight is a great thing, I did see this particular setup, but didn't take the trade.  
Plenty of these don't work out so nicely (see MEDI, overshot the 20 period EMA by 
a bit, then went down).  Anyway, pullbacks like this against a prevailing downtrend 
are the idea.  I think we are so oversold right now there are probably few stocks that 
have set up these pullbacks at the moment.  Dave Landry points out setups of this 
sort in his column each night at www.hardrightedge.com (also tradingmarkets).

On 24 Jul 2002 at 12:39, michael_niemotka@baxter.com wrote:

> So a bounce back up to say the 50 dMA is a classic entry point for
> shorting?

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