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Thursday, July 13, 2006

Index and Equity Entries and Targets

By Don Rogers

Here are the update numbers for those first posted July 05, 2006.

The Dow Jones, Nasdaq are moving further down and away from the entries set while the OIX is approximately 15.50 points away from hitting the long side entry while the OSX did have the entry hit of 209.79 with the target being 217.43. The stop for the OSX is 205.95.

The SOX entry of 415.61 is very close with todays close being 416.99. Once this move confirms I am seeing a move down to 389.67. The stop from the entry of 415.61 is 428.62.

XAU. The entry was 142.15, the target 148.67, the high off this move so far is 150.70, with the target being exceeded by 2.03.

TSX. The entry was 11669.96, target 11902.77, the high off the entry being hit so far was 11879.10, with 23.67 points to go before we hit the target.

In terms of equities it is a bit easier to do in that I have volume to consider and this always makes it far easier to validate the moves. However, my long term research has shown the indexes although they may not hit the targets to the upside or downside bang on, they come close enough to warrant it being a valuable indicator when you are tracking stocks on those indexes. With equities I can calculate pretty much right to the amount the share volume I require to move in or out of a position. Now, some say why allow the market to dictate your Due Diligence or DD and that of course is a good question. However as I replied to that question today on my blog about averaging down, you never know where a stock is headed. There are many examples just on my blog about not using your own bias or sentiment about a stock to rule your investment strategy. Perhaps the overall picture has not changed in terms of fundamentals but if the stock is falling, why buy in a downtrend. I did make the analogy that by trading on speculation or sentiment is the difference between flying in a stunt plane or an airliner. My system is the airliner. Most flights are boring, not much to do and not much to get excited about except for the odd bit of turbulence but overall, it does not share the same stomach churning aspects of being the passenger in a stunt plane flying to the same destination. It is anything but easy on the stomach flying in a stunt plane or the nerves. It may be exiciting at times but the other side of that coin is sheer terror at other times. So, looking at UTS for example, I had a long entry of $6.21 for $6.55. When I posted that on July 5 we had a close of $6.07. So, why wait? The day before the close was 6.14 so again, only .07 cents, so why wait? Nothing fundamentally has changed about the company. Well, on a 1000 share buy (I always default to 1000 shares because the percentages don't mean as much as dollars and cents) you would now be in the red on that trade by $1290.00. So, who cares if it goes to $50.00 as some claim? Well, for starters, there is no gurantee it will hit $50.00, and as I stated earlier, the only guarantee in the market is there is no guarantee. But that aside, why buy at $6.21 if you can buy at $4.92. Maybe it goes up from here. Maybe not. No idea. But by waiting for the $6.21 you did not buy a new position and you are now not down almost $1300.00. And then, if you think this is the bottom (see the message board, now is the time to load up) go for it. It is a guess. So, with that in mind, here are the equity entries and targets.

UTS-moving away from the entry

TSK-moving away from the entry

BWR-the entry was $1.40, target $1.54. Now remember how I say the volume has to come in at the close of the entry or higher. The volume needed to move validate the move was 2,095,521, the volume received was 4,847,483. Even more relevant was we did not get the volume surge before (the previous close saw volume a good deal less than the entry volumed ) the entry. With 4.8 million buyside shares the volume came right in at the area. We had a close of $1.41. So looking for the volume convergence with price at $1.41 was the smart thing to do. The stop loss from $1.40 is $1.33 meaning, we have to see a close of $1.33 or lower with X amount of volume to negate this long trade from 1.40.

BNK-The entry was .71, the volume validated it, the target was .63, came within .03 cents, the stop loss is .75, we had a close today of .74. If we close tomorrow with volume greater than 1,009,793 the move reverses at this point in time. If it does not and we get a close below .71 it could then take a second move down to hit the target. Had you shorted you would have covered partial at or near the target, trail stop the remainder and you would be flat the trade at this time. The stop loss would not be a consideration because the trade was green and came near the target and you never allow a green trade to turn red. The only time that can happen is you buy in, close in the green and the next day the trade reverses and moves to the stop. You can hang on to the technical stop.

ECA-we were in a trailing stop position. The trailing stop was 57.34, that trailing stop has now moved up to 57.67 or $330.00 more in your pocket with 1000 shares.

PDP-we were in a trailing stop position. The trailing stop was 10.80, the new trailing stop is 11.12, or $320.00 more dollars in your pocket.

Apart from those mentioned none of the others have yet hit their entries, either to the long side or the short side as mentioned in the blog. So by keeping an eye on volume and price converging together as it did on BWR, you stay on the same side as professional money. In terms of DD, they have done their DD as well and in all likelihood it is better than yours so, you trade with that in mind. They will always always know more than you do short and simple. There is another good example of information. Another energy stock broke its downtrend and finished green today. However, there have been a number of posts regarding the CEO of the company saying shareholders will be pleased with the next reports! Well, to me that sounds a bit too much like a hint and if the CEO is hinting in emails shareholders will be pleased, then the street definitely knows about it and it could explain the modest positive close today. That also begs the question. Is a hint insider information? If the trading ahead of the report begins to get heavier we will know information has leaked out. This type of news will render almost any TA useless. If you see a short move on this company for example and the NR comes with the positive news and the share price takes off, there is nothing you can do except cover as quickly as you can. But then, if the news was bad the CEO was not going to say that ahead of time is he?

I will be posting any downside moves on the above equites and indexes as soon as I finish off the calculations.

Remember, the amateurs open the markets, the pro's close them.

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