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Registered User
Joined: 2/2/2005
Posts: 27
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I thoroughly enjoyed Mariner51's thread "Starting new....". There was an enormous amount of advice given for anyone trading or considering trading. It made me re-evaluate where I am and where I am going. I realize I don't have enough fundamental knowledge, nor do I have a solid philosophy of trading. I was looking for "Inside my Trading Room" in 2 different bookstores, but both were out. Ended up with "Swing Trading" by Jon D. Markman. So far in my reading tonight, it is excellent.
I looked at my holdings and with my newfound "knowledge" still don't know anything. Does anyone have any opinion on NRMX? Particularly, what pattern is it in right now. Looks like a double bottom between May 17 and June 8, but what is happening now and what can I expect?
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Registered User
Joined: 1/28/2005
Posts: 6,049
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If we use past history. This bottom is in the style of
Aug 2006.
I think this one is a little better. The low was at the end
in Aug. The most recent low is a higher low now.
Realize that the stock didn't turn positive until it
broke its previous range. (about $12)
So in order to get optimistic here. It would have
break above about $8.
All the Worden indicators look positive:
TSV, MS, BOP
Until the stock shows signs of strength it is only a
potential bottom.
Thanks
diceman
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Registered User
Joined: 12/21/2004
Posts: 902
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Gat - I agree with Diceman - at this point it is only a potential bottom (a bunch of factors appear to be moving into place, but they aren't there yet).
I'm much better at identifying trends worth following, rather than picking bottoms - and I tend to look at things in terms of MACD-H - so I'll tell you what I see MACD-H-wise:
Take a daily chart with MACD-H (12,26,9 settings). Put it on zoom=3 or 4 so that you can see at least back to that last part of the Nov-Dec run-up and the current downturn beginning in Dec.
Look at the size and height level of the up MACD-H cycle that corresponds to that run-up - that was the strength of the bulls. The run-up peaked at the very end of November (MACD-H apex), the price held until Dec 20th or so and then started dropping - there was no bull strength left. Look at the corresponding size and depth of the down MACD-H cycle during this period. That's bear strength - and look at how strong it was.
Bulls mounted a come-back in February and March - but look at how small the 2 up MACD-H cycles were in February and March compared to the bull strength in November and the bear strength in Dec/Jan - pretty ineffectual, right? Not enough for a sustained rally. And then look what happened in April - this is important - there were 2 very weak bullish moves that barely registered on the MACD-H - this indicated a capitulation by the bulls - they had absolutely no strength to influence prices left at all and the bears completely took over. - Look at how the price completely dropped through the floor in May after that last small MACD-H up cycle at the end of April. It didn't even have to be that strong of a bearish move (the MACD-H isn't as deep here as it was in Jan, even though it did more damage to the price) - it didn't have to be - there wasn't any bullish strength to stop them and that's what those weak April up cycles show.
For a bottom to be reached, we need to get to the reverse of that - a capitulation by the bears, letting the bulls take control.
The current MACD-H up cycle is a good step in tha direction. Notice it's higher and bigger than any since Nov-Dec. Bullish strength is back - even though price hasn't responded by going up yet, the bleeding and the downturn have stopped.
You also have a bullish MACD-H divergence. Look at where the MACD-H is at the price point is at it's low point on 5/16 and then look at where the MACD-H is when it was matched on June 8. That's a very bullish sign.
But let's get back to the idea of capitulation. For the price to break out, the bears have to signal that they have no strength left - and this signals the bulls to move in and the price to finally rise.
Just as there needed to be those 2 tiny up MACD-H cycles in April that indicated bullish capitulation, I would expect to see at least one similar very small down MACD-H cycle to signal the bearish capitulation before the price starts rising in earnest.
What I would look for is the MACD-H to drop back below zero for a few bars, but only reach an extrremely shallow depth, and the entry point would be either the bar when the MACD-H starts rising again from the shallow low point, or a few bars later when it actually crosses zero - whichever is your comfort level that confirms that it was tiny weak MACD-H down cycle indicating capitulation.
One last thing - if you look at the weekly MACD-H - notice each cycle tends to have 2 extreme points - and right now the weekly MACD-H is rising from it's second low of the cycle - it should only be a short couple of bars before it crosses the 0.
Make sense? Any questions about this feel free to ask.
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Registered User
Joined: 9/22/2005
Posts: 849
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Thanks, hohandy.
Your discussion of MACD-H finally makes sense to me.
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Registered User
Joined: 12/21/2004
Posts: 902
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you're welcome Bcraig. I figured if I talked about long enough someone would get it sooner or later 
I hope you'll be able to successfully incorporate this into your own anlaysis and trading
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