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ARCHIVE:    JUNE/JULY

A new Market Call is posted
every market day.

Amgen Inc (NASDAQ: AMGN)
Market Call™ for August 23, 1999
Contributed by Mark Seleznov, TrendTrader.com.

The purpose of this Market Call section is to educate readers in technical analysis patterns and indicators. As with all investment information, you need to research information and consult your financial advisor before initiating any strategies that are contained in Market Call.

Also, you must realize that as with all trading strategies, opinions can change quickly depending on market conditions and developments.

This column tries to present historical examples, potential set ups, and examples of entry and exit strategies.

Also, you must realize that as with all trading strategies, opinions can change quickly depending on market conditions and developments.

This column tries to present historical examples, potential set ups, and examples of entry and exit strategies.

Retracements

The following forecasting method is an approach to charting price retracement in stocks, commodities, indexes, or any free market. It is a study of momentum, an evolution somewhere between Gann and Elliott Wave that allows traders to project an ideal entry price in a stock after a correction in price.

In this approach, a price move of any proportion will attempt to retrace itself by 50% to 62%. I know the purists use 61.8%, but I have found 62% serves me well.

A trader who applies these correction techniques spelled out in the following calculations, will quickly develop a new market perspective, a perspective of market direction. When a trader uses this wave analysis in combination with cycle analysis, as I do, the probability of success is magnified.

Remember that stocks do not go straight up, nor do they go straight down. The validity of this technique is enhanced by the fact that it can be used for intraday trading or longer-term projections. In my own trading, I use it with 5-minute and 10-minute bar charts, yet it proves it accurate over other time frames too. It can be applied to rising markets as well as declining ones with no noticeable difference in results.

Let's look at AMGEN Inc., (NASDAQ: AMGN) as an example.

The example here in AMGN is using 60-minute bars as the time frame. AMGN is an example of a projected price correction. By measuring from the low of August 10, 1999. AMGN was in a trading range prior to this up move on August 10.

Using trend following methods like moving averages or MACD would have generated a couple of trades with small losses.

The move that started on August 11 saw AMGN move up from 74 � to 84 13/16. That was a steady upward move of 10 points and a nice gain in the stock.

From August 16, AMGN started its retracement. I like the math in this one. It is easy. A 62% retracement of 10 points is 6 points. Notice how AMGEN retraced down 6 points from the 84 13/16 high to the 78 area.

With a small handle forming with Friday's action, AMGN looks poised to continue its upward move. This is also a trade that can be entered with good risk control.

If AMGN is going to move up, entry can be made by using a Buy stop order and a close stop under the congestion range entered. I would Buy AMGN at 80 3/8 on a Buy Stop. I would enter my stop at 78 3/8.

Chart courtesy of
 


Interested in adding Market Call to your website?
Click here for details: Market Call Information

Mark A. Seleznov is a General Securities Principal and Managing Partner of Trend Trader, LLC, a NASD, SIPC broker/dealer firm located in Scottsdale, Arizona. A professional trader for over 25 years, Mark was a Market Maker on the Philadelphia Stock Exchange, a Retail Registered Representative, and futures trader. Mark is an author and recognized expert in equity Day Trading. He conducts seminars in Equity Day Trading and offers his firm traders training and support. If his firm holds any positions in the public companies he writes about, it will be noted at the bottom of his article.

Market Calls is a daily syndicated column on trading by Mark A. Seleznov, Managing Partner of Trend Trader, LLC. For information on obtaining Market Calls for your web site, newspapers, or publication, contact
Trend Trader, LLC at 602-948-1146

Disclaimer: Trading in securities may not be suitable for all individuals. Consult your broker or other professional to determine your suitability. This is not an offer to buy or sell securities. The advice given above is of a general nature and should not be taken as a recommendation to buy or sell the referenced security.

 
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