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

From: Tomas <tomas986@yahoo.com>
Subject: Re: [CANSLIM] HITK--Volume Studies-Part 9, OSTE
Date: Thu, 21 Aug 2003 20:41:59 -0700 (PDT)

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DMC,

I see. You are saying that HITK, base on the
support/resistance lines, has a potential to go down
further than OSTE.

Just one point on your example.  Since OTSE's price is
about half of HITK, it would be a better comparison if
you use 2000 share of OTSE vs 1000 share of HITK.

Thanks,
tomas


- --- DMC197807 <dmc197807@comcast.net> wrote:
> 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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