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ARCHIVE:    JUNE 1999-JANUARY 2001  

An InvestorLinks article
distributed every market day.

International Game Technology  (NYSE: IGT)
Market Call™ for February 9, 2001
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.

You need to know when the party is over.

A trader takes what the market gives and lets the market tell them when the trend has changed. When a stock breaks the low of the lowest low in the last 20 bars, it could signal a major trend change.

Support, Resistance and Breakouts

Think of security prices as a war. It is a battle between a bull (the buyer) and a bear (the seller). The bulls push prices higher and the bears push prices lower. A buyer that feels an area has good value, will buy at that level. The seller that feels that a stock has reached fair value, will sell at that higher fair value price. The direction prices actually move reveals who has won the battle.

Remember when a trade takes place, a buyer and seller agreed to a price. There was a buyer and a seller involved in the transaction. The buyer feels the stock will go up. The seller wants to move on to another stock that he may feel will appreciate faster.

Support levels are the price where the majority of traders feel the value is a good buy.

Resistance is the level in which the majority of traders feel prices will move lower.

When the majority of traders and investors change their expectations, these support and resistance areas get violated and a new trend may be beginning. This can occur due to changes in expectation of earnings, new product development, change of personnel, cut backs or expansions.

One interesting pattern that traders see after a breakout, is that the stock or index retraces a part of the initial move by about 50%. If the 50% retracement does not hold, the stock or index can still be in a trend if the previous breakout resistance holds.

International Game Technology, IGT.

Lets look at an example of a potential breakdown in International Game Technology, IGT.

After another upward thrust, IGT moved sharply up from 44 to 52. During the past 3 days, IGT has struggled at this level of 51 to 52. Today, February 8, 2001, IGT broke a support level of 51 and closed at 50.20.

Support has been broken. I would exit longs at this time. An aggressive trader may want to Short IGT here.

Perhaps this is support in the stock and the stock will move higher. However, as it stands now, there are many new buyers who I believe will exit their position in IGT as it breaks this support.

I do not like tests of support. Usually stocks breaking multiple tests of support do very poorly once that support is broken. If a short is entered, place a close stop at 51 �.

There many stocks that looks like this IGT chart. Be aware of support and resistance levels in your stocks.

For tick by tick charting and quotes for trading, use Trend Trader TORS Software.

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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Last modified: April 09, 2001

Published By Tulips and Bears LLC