 Platinum Customer
Joined: 4/17/2006
Posts: 271
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MSI is up against a 20 yr high. Although it has looked strong since 11/06, rising from .80 to 3.50, does it look a little frothy here? MACD not quite as vigorous as one might hope 2/23's 31% increase. BOP not as strong as 11/06-1/07, but good MS, TSV and vol and industry group (Consumer non-durables/Textile-Apparel Clothing) is rising. What do other folks think?
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Registered User
Joined: 3/21/2006
Posts: 4,308
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Very good stock here, I have it on a consolidation pattern watchlist and missed it when it broke through the trend line..
I will buy Monday if it rises above $3.55 or whenever it crosses that mark..
Price is well above the 50day and 250 day xma, Most of my indicators are giving thumbs up on this one..
Again I have been burned by not paying enough attention to my watchlists..
Thank you for reminding me of this one Sharkattak..
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Platinum Customer
Joined: 4/17/2006
Posts: 271
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YW, apsll. And thanks for your thoughts on MSI. As a beginner, I am having a heck of a time getting rid of the flawed assumption that says, "Despite the strength in the charts, if a stock has gone up 'too much'*, then you better not buy it since it's bound to fall soon".
*My mind determines 'too much' just because the stock's 'gone up alot' (whatever that is)...no reasoning enters into this leech-like thinking that I'm having a hard time detaching from my brain.
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Registered User
Joined: 2/24/2007
Posts: 12
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i hear you on that, but hey, the chart is the chart, either we act on faith in it or what do we have?
you can always sit by and just watch it, that way you can learn without any risk.
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Platinum Customer
Joined: 4/17/2006
Posts: 271
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Hi, bbb. I sat and watched XOMA, after I had identified cup & handle. Things looked "too high", despite very strong technicals. Had I bought on 1/26, I'd be up 31%. Have done that with other charts, but less so as I learn about TA. I fight my illogical assumptions about "too high" that I think lots of rookies struggle with. Have to have faith in what the charts tell your brain, not how your brain skews the charts.
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Registered User
Joined: 2/24/2007
Posts: 12
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yeah, i agree.
what do you make of RNO and BWLRF?
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Registered User
Joined: 2/24/2007
Posts: 12
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any suggestions on anything for entry this week?
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Registered User
Joined: 2/24/2007
Posts: 12
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check out NEXC if you havent already.
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Platinum Customer
Joined: 4/17/2006
Posts: 271
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1)RNO looks good...so do many gold stocks. Don't know if it might be helpful to scan them all and pick the strongest.
2)BWLRF: Can't find it in TC.
3)NEXC: Sure has been strong and formed a white maribozou. So assuming it opens bullishly on Mon, may be a good buy. (Still just learning about candles.)
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Registered User
Joined: 12/21/2004
Posts: 902
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If I may suggest to the newbie problem of stocks going up "too much" that Shark is talking about - what helped me, I think, psychologically, was that I switched my main screen indicators from those that oscilate (i.e., Stochs and BOP) to those that expand further as the value increases, such as MACD and MS. I think the problem with oscilators is that by staying in a defined -100/+100 range, there is a feeling of "oh, oh, it's getting close to 100 - it's going to drop!" and having those indicators expand to fit the stock rise, rather than threatening imminent demise from hitting a ceiling I found tremendously reassuring for making decisions on those kind of stocks.
As for a contibution for this week - TRA has been *awesome* since last November, and is in an extremely strong group (Agricultural Chemicals - think ethanol, planting beaucoups amount of corn, and the massive amounts of fertilizer needed for planting such corn). It has been a very well behaved stock, both price and volume-wise, continually finding and responding to price support levels, and just recently passed it's alltime high (mid 1990s) of $15. 2 days ago it had it's "worst" day since the August upturn, quickly found support and rebounded nicely. I generally load about 250 charts a night on a slideshow, and TRA never fails to catch my eye as it comes around.
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Platinum Customer
Joined: 4/17/2006
Posts: 271
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Hohandy, Thanks for the great psychological strategy to trick and train the newbie's brain! I'm going to give that a try. Thanks very much. It reminds me some of how I'm transitioning from paper to real trading. It occurred to me while paper-trading that I'd sometimes feel particularly good about a trade and think, "Wish I were trading real money on this stock". So while I'm still paper-trading (and being just as careful and deliberate as if I were making real money decisions) and feeling particularly good about a trade, I sometimes decide to place a real money trade along side the paper trade. Doing both real and paper trades simultaneously seems to "fool" my brain so it still remains emotionally in paper-trading gear, i.e. rational rather than emotional, so it seems I am more able to stay in logical decision-making mode without the guts churning and heart pounding thing going on. Don't know if that might help other newbies, but it has helped me alot. AND, Hohandy, I'm going to try your strategy which sounds intriguing. How did you happen upon this approach? Thanks!
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Registered User
Joined: 12/21/2004
Posts: 902
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Strictly trial and error, Shark. Stoch was one of the first indicators that I actually understood enough to use when I first started years ago. The idea of being told when to buy (crossing the 20 from underneath), when not to buy (crossing 80 going up), and when to sell (crossing 80 going down) was, and is, very comforting when one is facing a barrage of other information, most of which one doesn't understand. But the drawback of this method is exactly as what you described - I got used to automatically thinking that once something got past 80 on the stoch, that that was it - and I missed out on a lot of good price movement once the stoch got "too high". Without realizing it, I had unconscously adopted an oscilator, rather than a linear, view of stock movement - and I think that's very psychologically limiting.
Later on, I read Dr Alexander Elder's books (highly recommended) and he's very big on the MACD indicator - especially comparing MACD divergences to similar price extreme points in the past, and I moved MACD to my front screen rather than the Stoch. I quickly observed that stocks which would appear untouchable using stoch, such as TRA which I mentioned earlier, are still very attractive when using MACD - and a big part of that difference is that the MACD indicator expands rather than oscilates - there is no ceiling. As long as MACD is positive and healthy in comparison to it's previous price points, it is no longer an issue of being "overbought" or not so I no longer have that fear or mindset. I'm not saying that Stoch has no value or is meaningless, just that that I think you have to break the habit of thinking in the oscilator model that everything at some point hits a hard ceiling.
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Registered User
Joined: 12/21/2004
Posts: 902
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Amd, Shark, I haven't addressed your question re MSI.
Using Dr Elder's criteria, it looks like a good stock. On a weekly and daily basis, the 13 and 26 ema are both rising <check>. On a weekly basis, the MACD (12,26,9) is rising and the TSV (he uses something called Force Index which is similar to TSV) is at a high level <check>. On a daily basis the MACD is rising, and the TSV isn't that high, but is above zero <check>. Looking at MACD comparisons to previous price extremes - compare MACD of Friday to the MACD of the price high in January - much lower now, meaning this high probably won't hold in the shortterm (we would expect some pullback or consolidation after Friday's movement, so that isn't necessarily determinative) but switching to a weekly chart and comparing MACD back to its previous price high back in late 2003, we see the MACD now is much higher - indicating in the weekly view that the price rise now should hold and keep going. Switching to the monthly view strongly comfirms this.
Also, looking at the monthly view, indicates a ringing of the what Alan Farley calls "the third bell", i.e., "Breakouts through a triple top signal major uptrends" - and the current MACD-H compares favorable to each of the previous price spikes going back to the all-time high in 1988-89.
and, cheating a little bit, going over to Barchart.com, they list MSI as top 1% (strength) and top 10% (direction) and include it in their Top 100 stocks list (which I include each week as part of the basis of stocks in my watchlist universe). So, all in all, I'd give MSI a "two thumbs up".
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Platinum Customer
Joined: 4/17/2006
Posts: 271
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Thanks so much for your explanation which adds a new dimension to understanding newbies' faulty logic...and I think you're a genius for coming at the problem from the perspective of "bounded" vs "expanding" indicators. We are used to thinking in terms of our real physical world where gravity reigns. I wonder if newbies superimpose the concept of physical "up" and "down" governed by gravity into the abstract world of money which obviously is governed by rules other than gravity. Gravity is a one way magnetic field where things move one way with gravity-down....and there is a limit to down, i.e. the physical ground...and a physical limit to "up", i.e. we can only jump so high before gravity pulls us down. There is no opposite pole like anti-gravity where things get pulled in the opposite direction-up (except perhaps in esoteric physics, but we don't physically live in that world)...All our lives we live in a one way world: gravity/down. However, in the abstract world of money, the concepts of high and low are ruled by two kinds of magnetic fields: greed "pulls" money "up" towards it and there is no ceiling; fear "repels" money and drives it in the opposite direction...only thisdirection does have a limit/floor, i.e. "0" (as in losing all the money you pumped into a trade). I know, I know, I'm rambling and this is over-simplified, but your thinking on limited oscillators vs expanding indicators I think helps explain how the newbie comes into this new abstract world and, not having yet learned the news rules which govern life in this new world, erroneously tries to live by the rules which have governed their lives, i.e. gravity. Hohandy, your thinking has, I believe, helped me understand the root of erroneous newbie thinking; and by understanding where it comes from, we can better find ways to leave behind old rules and learn the new ones that define this new abstract world. Does this make sense to anyone else? (If not, just call me psychotic.)
And thanks, too, for your thoughts re MSI. I really like the logicality of your decision-making process. I've never heard of Alan Farley, but will look him and his "third bell" up. And I haven't used Barchart in a while, so thanks for reminder...their site offers additional objective factors that one can use in their trading decisions.
Thanks!!
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Registered User
Joined: 1/28/2005
Posts: 6,049
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If you look at this on a longer term chart. (weekly/monthly)
It has a tendency to run up sharply than fall back down.
I'm not saying you cant make money short-term. Just be
aware. It has been here before.
Thanks
diceman
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Platinum Customer
Joined: 4/17/2006
Posts: 271
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Also, I've been reading about Darvas Boxes and use the online calculator you can find by googling "sethi" and "darvas box". According to this plotter, MSI just flashed a new buy signal 2/23.
StockTA also allows you to plug in a stock symbol and it will provide you with all Fib resistances and supports along with a chart. Very helpful site. It shows the strong 2/23 bar bounced off a cluster of 12 Fib Supports @ 2.56. Additional supports @ 2.76 (2) & @ 2.89 (3). It does not show any resistances.
And I agree with you that after the strong 2/23 move, it may pb a little...I'm guessing to @ 2.85 - 3 before resuming its uptrend.
(For those who work with Pivot Points, traderzoo.net has an online "pivot calculator" (google those terms for site).
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Registered User
Joined: 12/21/2004
Posts: 902
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You're welcome Shark. I don't know if my ideas are valid or if I'm just blowing smoke - but it is a perspective and sometimes one has to think outside the box, so to speak.
Farley is the author of The Master Swing Trader (also highly recommended), and runs a really good technical website called therightedge.com which is a good mix of educational and daily market commentary articles. The "third bell" is really just his characterization of the "cup and handle" - but the general idea is the same - when a stock busts through resistance on the third try, after failing twice, is usually a good signal of things to come.
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Registered User
Joined: 4/3/2005
Posts: 91
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I hope all are aware that MSI and Frederick's of Hollywood are "merging", and since FOH holdings is not publically traded, it is difficult to determine how the current shares of MSI will be affected. MSI is going to issue 27 million shares of their stock to the FOH Holdings and also put up for sale $20 million of new stock. Currently the float is only about 12Mill. shares. Since MSI earnings announced first on 2/13 didn't cause a great uptrend ( they were good) the recent uptrend might be due to rumors on FOH unpublished earnings. I would recommend that you read the last 10Q before making a decision and play it tight. IMO.
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Platinum Customer
Joined: 4/17/2006
Posts: 271
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Diceman, Just like you said, it has a tendency to run up sharply then fall back down. Maybe I can catch it once it's bottomed and looks read to run again...Of course that could be years away.
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