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.
Focus on Exit – Take what the market gives you, the market is
always right.
Many of the Internet stocks have rebounded recently. Rumors abound about
mergers, deals and other combinations that have stirred recent price moves.
We know what support and resistance looks like and can draw trend line
across these key areas.
We have seen how a tool like moving average crossovers can help keep you in
a trend.
Let's look an exit strategy using Yahoo Inc. (NASDAQ: YHOO) as our
example.
On September 20, 1999, YHOO broke a short-term resistance and moved higher.
This move was also confirmed by crossing moving averages that you see daily
in this column.
I am now seeing some warning signals and I would be ready to exit and
possibly enter a short position in YHOO.
>From the chart below, you could draw a trend line across the lows from
September 15, 23rd, and 28. A resistance line can be drawn at 188, which
was a resistance area from July 6.
I am concerned with the action in the MACD, Momentum and OBV indicators.
The MACD and Momentum indicators have lower highs and lower lows. OBV seems
to be rolling over.
