Go to Jeff Salisbury LWGate Home Page.From: Eric Jaenike <ericjaenike@yahoo.com>
Subject: Re: [CANSLIM] Off topic Support - Resistance
Date: Thu, 19 Jun 2003 13:09:42 -0700 (PDT)
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I'll throw my 2 cents in here, as I've migrated toward swing trading in addition to positional breakout trading (of which CANSLIM is a powerful version).
Swing trading is trading between support and resistance on the long side, and resistance and support on the short side. In its purest form, it involves trading a single, direct price thrust from support/resistance to resistance/support. In the strictest definitions, this "swing" in price will generally occur over 3-5 days, so you have fairly abbreviated holding periods. One generally does not hold through retracements. This is in contrast to CANSLIM trading, which advocates trading a breakout through resistance (the pivot point), holding through (benign) pullbacks, and selling at major tops. CANSLIM is a strategy to capture large, major moves. Swing trading is designed to capture smaller and quicker moves.
The Master Swing Trader, by Alan Farley, was my introduction to swing trading. It is an excellent book, but very advanced, and I would definitely not recommend it for traders who are just starting out. He also offers an online course, available at hardrightedge.com, and writes a subscription newsletter (which I use and is excellent- available through Realmoney.com). However, these services are not cheap, and require a lot of work to employ effectively.
Eric
Gene Ricci <genr@swbell.net> wrote:
|Can you say a little more about "support and resistance" trading? Dave|
Hi Dave, I believe it is key to know what the trend is (sideways, up, down).
If in Trading Range:
Long
a) when going long and the stock is rangebound - buy at a prescribed amount above the support point. Place stop just below support point.
b) sell when stock price approaches resistance.
Short
a) when shorting and the stock is range bound - short at a prescribed amount below the resistance point. Place stop just above resistance point.
b) cover when stock price approaches support.
For Pullback trading in Trending market:
Long
a) when going long and the stock is pulling back in an uptrend - buy at a prescribed amount above the support point. Place stop just below support point.
b) sell if price can not penetrate previous high, otherwise let your profits run.
Short
a) when shorting and the stock is rising (correcting) in a downtrend - short at a prescribed amount below the resistance point. Place stop just above resistance point.
b) cover if price can not penetrate next support level, otherwise let your profits run.
For Breakout strategies: (If support or resistance levels are broken or you anticipate they will be broken):
Long
a) when going long and the stock is in an uptrend - buy at a prescribed amount above the resistance point when price penetrates resistance with stop just below resistance.
b) sell if price can not penetrate next resistance level otherwise let your profits run.
Short
a) when shorting and the stock is in a downtrend - short at a prescribed amount below the support point when price penetrates support, with stop just above support.
b) cover when price can not penetrate next support level, otherwise let your profits run.
Now it's time to get a bag of freshly popped popcorn and check out some movies:
http://www.pring.com/movies.htm
or got to StockCharts.com
http://stockcharts.com/education/What/ChartAnalysis/supportResistance.html
Here is a list of my reference books:
1) Intro to Technical Analysis - Martin Pring - $38.95 (comes with CD)
2) Breaking the Black Box - Martin Pring - $39.95 (comes with CD)
3) Come Into My Trading Room - Dr. Alexander Elder - $35.00
4) Methods of a Wall Street Master - Victor Sperandeo - $14.95
5) Secrets for Profiting in Bull and Bear Markets - Stan Weinstein - $19.95
We had Dallas workshop on Stan Weinstein's Method at the end of 2001
(gosh, it doesn't seem like it was that long ago), I'll dig around my archives
to locate the workshop notes and forward them to you at a later date.
Hope this helps,
Gene
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<DIV>I'll throw my 2 cents in here, as I've migrated toward swing trading in addition to positional breakout trading (of which CANSLIM is a powerful version).</DIV>
<DIV> </DIV>
<DIV>Swing trading is trading between support and resistance on the long side, and resistance and support on the short side. In its purest form, it involves trading a single, direct price thrust from support/resistance to resistance/support. In the strictest definitions, this "swing" in price will generally occur over 3-5 days, so you have fairly abbreviated holding periods. One generally does not hold through retracements. This is in contrast to CANSLIM trading, which advocates trading a breakout through resistance (the pivot point), holding through (benign) pullbacks, and selling at major tops. CANSLIM is a strategy to capture large, major moves. Swing trading is designed to capture smaller and quicker moves.</DIV>
<DIV> </DIV>
<DIV><EM>The Master Swing Trader, </EM>by Alan Farley, was my introduction to swing trading. It is an excellent book, but very advanced, and I would definitely not recommend it for traders who are just starting out. He also offers an online course, available at hardrightedge.com, and writes a subscription newsletter (which I use and is excellent- available through Realmoney.com). However, these services are not cheap, and require a lot of work to employ effectively.</DIV>
<DIV> </DIV>
<DIV>Eric</DIV>
<DIV> </DIV>
<DIV><BR><BR><B><I>Gene Ricci <genr@swbell.net></I></B> wrote:</DIV>
<BLOCKQUOTE style="PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #1010ff 2px solid">
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<DIV><FONT face="Comic Sans MS"><STRONG><FONT color=#0000ff>|</FONT></STRONG><FONT face="Times New Roman">Can you say a little more about "support and resistance" trading? Dave</FONT><FONT face="Comic Sans MS" color=#0000ff><STRONG>|</STRONG></FONT></FONT></DIV>
<DIV><FONT face="Comic Sans MS"><STRONG><FONT color=#0000ff></FONT></STRONG></FONT> </DIV>
<DIV><FONT face="Comic Sans MS">
<DIV><FONT size=2>Hi Dave, I </FONT><FONT size=2>believe it is key to know what the trend is (sideways, up, down).</FONT></DIV>
<DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT color=#0000ff size=2><STRONG>If in Trading Range:</STRONG></FONT></DIV>
<DIV><FONT face="Comic Sans MS"><FONT size=2> </FONT>
<DIV><U><FONT size=2>Long </FONT></U></DIV>
<DIV><FONT size=2>a) when going long and the stock is rangebound - buy at a prescribed amount above the support point. Place stop just below support point.</FONT></DIV>
<DIV><FONT size=2>b) sell when stock price approaches resistance.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><U><FONT size=2>Short </FONT></U></DIV>
<DIV><FONT size=2>a) when shorting and the stock is range bound - short at a prescribed amount below the resistance point. Place stop just above resistance point.</FONT></DIV>
<DIV><FONT size=2>b) cover when stock price approaches support.</FONT></DIV>
<DIV><FONT size=3><FONT size=2></FONT> </DIV>
<DIV><FONT color=#0000ff><STRONG>For Pullback trading in Trending market:</STRONG></FONT></DIV>
<DIV><FONT face=Arial></FONT> </DIV>
<DIV><FONT face=Arial>
<DIV><FONT face="Comic Sans MS"><U>Long </U></FONT></DIV>
<DIV><FONT face="Comic Sans MS">a) when going long and the stock is pulling back in an uptrend - buy at a prescribed amount above the support point. Place stop just below support point.</FONT></DIV>
<DIV><FONT face="Comic Sans MS">b) sell if price can not penetrate previous high, otherwise let your profits run.</FONT></DIV>
<DIV><FONT face="Comic Sans MS"></FONT> </DIV>
<DIV><FONT face="Comic Sans MS"><U>Short </U></FONT></DIV>
<DIV><FONT face="Comic Sans MS">a) when shorting and the stock is rising (correcting) in a downtrend - short at a prescribed amount below the resistance point. Place stop just above resistance point.</FONT></DIV>
<DIV><FONT face="Comic Sans MS">b) cover if price can not penetrate next support level, otherwise let your profits run.</FONT></DIV></FONT></DIV>
<DIV><FONT face=Arial></FONT> </DIV>
<DIV><FONT face=Arial></FONT> </DIV>
<DIV><FONT face=Arial color=#0000ff><STRONG><FONT face="Comic Sans MS">For Breakout strategies</FONT><FONT face=Arial>: (</FONT></STRONG></FONT><FONT face=Arial>If support or resistance levels are broken or you anticipate they will be broken):</FONT></DIV>
<DIV><FONT face=Arial></FONT> </DIV></FONT></DIV></FONT></DIV>
<DIV><FONT size=2>
<DIV><FONT face="Comic Sans MS"><U>Long</U></FONT></DIV>
<DIV><FONT face="Comic Sans MS">a) when going long and the stock is in an uptrend - buy at a prescribed amount above the resistance point when price penetrates resistance with stop just below resistance.</FONT></DIV>
<DIV><FONT face="Comic Sans MS">b) sell if price can not penetrate next resistance level otherwise let your profits run.</FONT></DIV>
<DIV><FONT face="Comic Sans MS"></FONT> </DIV>
<DIV><FONT face="Comic Sans MS"><U>Short</U></FONT></DIV>
<DIV><FONT face="Comic Sans MS">a) when shorting and the stock is in a downtrend - short at a prescribed amount below the support point when price penetrates support, with stop just above support.</FONT></DIV>
<DIV><FONT face="Comic Sans MS">b) cover when price can not penetrate next support level, otherwise let your profits run. </FONT></DIV>
<DIV><FONT size=3></FONT></FONT> </DIV></DIV></DIV></FONT>
<DIV><FONT face="Comic Sans MS" size=2>Now it's time to get a bag of freshly popped popcorn and check out some movies:</FONT></DIV>
<DIV><FONT face="Comic Sans MS" size=2></FONT> </DIV>
<DIV><FONT face="Comic Sans MS" color=#000000 size=2><A href="http://www.pring.com/movies.htm">http://www.pring.com/movies.htm</A></FONT></DIV>
<DIV><FONT face="Comic Sans MS"></FONT> </DIV>
<DIV><FONT face="Comic Sans MS">or got to StockCharts.com</FONT></DIV>
<DIV><FONT face="Comic Sans MS" size=2></FONT> </DIV>
<DIV><FONT face="Comic Sans MS" size=2><A href="http://stockcharts.com/education/What/ChartAnalysis/supportResistance.html">http://stockcharts.com/education/What/ChartAnalysis/supportResistance.html</A></FONT></DIV>
<DIV><FONT face="Comic Sans MS"></FONT> </DIV>
<DIV><FONT face="Comic Sans MS"><FONT size=2><FONT color=#800080>H</FONT>ere is a list of my reference books:</FONT></FONT></DIV>
<DIV><FONT face="Comic Sans MS" size=2></FONT> </DIV>
<DIV><FONT face="Comic Sans MS" size=2>1) Intro to Technical Analysis - Martin Pring - $38.95 (comes with CD)</FONT></DIV>
<DIV><FONT face="Comic Sans MS" size=2>2) Breaking the Black Box - Martin Pring - $39.95 (comes with CD)</FONT></DIV>
<DIV><FONT face="Comic Sans MS" size=2>
<DIV><FONT face="Comic Sans MS" size=2>3) Come Into My Trading Room - Dr. Alexander Elder - $35.00</FONT></DIV>
<DIV><FONT face="Comic Sans MS" size=2>4) Methods of a Wall Street Master - Victor Sperandeo - $14.95</FONT></DIV></FONT></DIV>
<DIV><FONT face="Comic Sans MS" size=2>5) Secrets for Profiting in Bull and Bear Markets - Stan Weinstein - $19.95</FONT></DIV>
<DIV>
<DIV><FONT face="Comic Sans MS"> </FONT><FONT face="Comic Sans MS"><FONT size=2>We had Dallas workshop on Stan Weinstein's Method at the end of 2001</FONT></FONT></DIV>
<DIV><FONT face="Comic Sans MS"><FONT size=2> (gosh, it doesn't seem like it was that long ago), I'll dig around my archives </FONT></FONT></DIV>
<DIV><FONT face="Comic Sans MS"><FONT size=2> to locate the workshop notes and forward them to you at a later date.</FONT></FONT></DIV>
<DIV><FONT face="Comic Sans MS" size=2></FONT> </DIV>
<DIV><FONT face="Comic Sans MS" size=2>Hope this helps,</FONT></DIV></DIV>
<DIV><FONT face="Comic Sans MS" size=2>Gene</FONT></DIV></BLOCKQUOTE><p><hr SIZE=1>
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