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ARCHIVE:    JUNE/JULY  AUGUST/SEPTEMBER

An InvestorLinks article
distributed every market day.

Lucent Technologies (NYSE: LU)
Market Call™ for September 21, 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.

The type of market we are in will have an effect on the strategies that many traders will use. If we are in a sideways pattern, some traders will abandon moving averages or another trend following method. I am basically a Trend Trader. I am looking for a trend and will accept the problem of whipsaw associated with sideways markets. I also realize that we have a market of stocks, not necessarily a stock market.

Look at Friday as an example. IBM breaks support and closes down 4 5/8 or 3.5%. Dell Computer Corporation, DELL was up 4.5% or 2 1/8 on the same day. My point here is to find indicators and pattern that you can establish sound systematic strategies knowing that they working better during some markets and not as well in others. Over the long run, if your strategies have sound foundation and cuts losses, you should prevail in the long run.

Channel Breakouts are one of the most respected methods of trading. Traders will have different trigger strategies. The principal behind a Channel Breakout is that when a stock trades above the highest price or below the lowest price in the last N (number of periods) number of periods, a new trend may be starting to take place.

This channel trading method can be used in any number of periods from minute bars to weekly time frames. The results of using such a method will often result in a stock moving above a defined resistance or below a defined support area.

I feel that with any pattern, indicator, or strategy, the key is to recognize when it works and when it doesn't. A pattern or indicator tested over a long period of time may only have a 50-50 chance of working out in a trader’s favor. A key to successful trading is to limit losses with stops and recognize when the pattern or indicator did not perform as expected. I like using a 20 period breakout.

Let's look at Lucent Technologies, (NYSE: LU).

For the last month, LU has been range bound. The entire market has been range bound. But with the current action, I am expecting another breakout here.

To be sure that LU it is going through resistance now, I would place Buy Stop order to Buy the breakout or enter myself on Day Trading software hits the breakout price.

I would Buy LU above today's high at 70 1/2 on a Buy Stop. As we saw in yesterday's Market Call, do not anticipate. Wait for the breakout. If the stock trades at 70 � and I enter, I would place my stop immediately at 68 1/8.

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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