Re: [CANSLIM] HITK--Volume Studies-Part 9, OSTE

From: "DMC197807" <dmc197807@comcast.net>
Subject: Re: [CANSLIM] HITK--Volume Studies-Part 9, OSTE
Date: Thu, 21 Aug 2003 20:12:54 -0700

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Tomas,

ATR is average true range, normally set as the 14 day average range that a
stock trades through during a day.  So if your stock opens at 12 and closes
at 13 every day for 14 days your ATR is 1.  If it opens at 12 and closes at
13 for 7 days and at 12.50 for 7 days your ATR is 0.75.  It not only lets
you look at what's a normal trading range for setting stops, it also acts as
a proxy for individual stock volatility.  If you want to buy a stock after a
gap and crap, like HITK or OSTE, then you'll want to wait (generally) for
the selling to stop and for the stock to regain its somewhat historic ATR.
On OSTE, with the plunge it's ATR zooned up to above .90, but its historical
ATR (from April, anyway) looks to have been about 0.25:

http://stockcharts.com/def/servlet/SC.web?c=OSTE,uu[h,a]daclyiay[pc20!b50!f]
[vc60][iut!Lc20!Lg!Lr14]&pref=G

Picking a stock to short is trickier than picking a stock to go long, for
some strange reason I haven't yet completely fathomed.

On OSTE, let's say I'm looking at shorting 1,000 shares.  Where do I enter,
and where is it likely to stop?  I can see previous resistance at 11.  Let's
say I short today at 11.75, and if I cover at 11.07, then I make $650 for
all my risk after commissions.  Hmmmm.  Of course it might drop down to 8
pretty quick, that'd be nice, but I can't be sure.

Now with HITK, if my premonition of the future is right, I short 1,000
shares of HITK here at 26 and I feel pretty good about it getting back down
to 20, so that's $6,000 in the bank.  I also think that since it bounced off
21.12 last time, maybe it bounces off 20 this time and maybe it bounces down
through.  If so, the next spot I see (on the weekly) is $12 or $13.  Now
that's $12K or $13K on the trade, so that's nice.  In fact that's nicer.
Yes, HITK costs more (about twice) but the reward, as I pre-imagine it, is
maybe 10 times as much.


- ----- Original Message -----
From: "Tomas" <tomas986@yahoo.com>
To: <canslim@lists.xmission.com>
Sent: Thursday, August 21, 2003 6:54 PM
Subject: Re: [CANSLIM] HITK--Volume Studies-Part 9, OSTE


> DMC,
>
> Thanks for the thorough analysis.  A few questions.
> What is ATR?  What it the significant of the moving
> average crossing?
>
> Why do you consider HITK a good short candidate but
> not OSTE?  Is it because HITK has lower highs and
> lower lows, and you can guess it going down until the
> next support level?  And for OSTE, with its constant
> downward trend, it is hard to tell when to short?
>
> tomas



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