I USE THE 50 AND 200 SIMPLE MOVING AVERAGES AS THESE
ARE THE TWO MOVING AVERAGES THAT HAVE BEEN USED
HISTORICALLY BY THE GREATEST MUTUAL FUNDS WHEN THEY GO
TO SUPPORT THEIR TOP HOLDINGS AFTER THEY HAVE PULLED
BACK. IN BULL MARKETS, THE BEST STOCKS WILL EITHER
BOUNCE DIRECTLY OFF OF THESE TWO AVERAGES OR THEY WILL
“HANG OUT” AROUND THESE TWO AVERAGES BEFORE RESUMING
THEIR UPTREND. IN STOCKS THAT GO INTO EXTREMELY
PARABOLIC RUNS YOU CAN USE THE 21 DAY MOVING AVERAGE
AS THIS HAS BEEN A POPULAR MOVING AVERAGE RECENTLY IN
TOP STOCKS.

WE ALSO USE THE 10 DAY MOVING AVERAGE TO SPOT POCKET-PIVOT POINT BUY OPPORTUNITIES AND USE THE 10 DAY AND 20 DAY MOVING AVERAGE FOR SELL SIGNALS IF THESE AVERAGES ARE BREACHED ON VERY HEAVY VOLUME.

What are some other secondary indicators you use besides price and volume?

THERE REALLY ISN’T ANYTHING I USE BESIDES PRICE AND
VOLUME SINCE EVERY TECHNICAL INDICATOR IS BASED OFF OF
PRICE AND VOLUME AND SOMETIMES TIME. I DO LIKE TO LOOK
AT THE RELATIVE STRENGTH OF A STOCK IN RELATION TO THE
SP 500 AS STOCKS THAT ARE USUALLY RANKED 70-99
OUTPERFORM THE REST OF THE MARKET BY QUITE A MARGIN. I
ALSO LIKE TO USE BOP (A PROPRIETARY INDICATOR BY DON
WORDEN ON TELECHART) WITH SMALL-CAP AND MID-CAP STOCKS
AS POSITIVE DIVERGENCES AND GREEN TO MAX GREEN BOP HAS
CORRELATED TO SOME EXTREMELY LARGE PRICE GAINS

What are you looking for in a chart?

WHEN IT COMES TO A PERFECT STOCK THE MOST IMPORTANT
THING IS THE MARKET/SECTOR. IF THE STOCK MARKET IS IN
A VERY BULLISH MARKET AND THE STOCK IS A TOP STOCK IN
A LEADING SECTOR IN THE BULL MARKET I NORMALLY LOOK
FOR A VARIETY OF SETUPS LIKE A CUP WITH HANDLE, A HIGH
TIGHT FLAG, A DOUBLE BOTTOM, AN ASCENDING BASE, A CUP
PATTERN, OR A BOUNCE OFF THE 50 DAY MOVING AVERAGE
INTO NEW HIGH GROUND THAT COMES FROM A BASE LASTING AT
LEAST FIVE TO SEVEN WEEKS LONG. THE VOLUME DURING THE
BASE SHOULD BE VERY LOW DURING THE PULLBACKS AND THERE
SHOULD BE CLEAR HEAVY ACCUMULATION ON THE BOTTOM,
RIGHT SIDE, AND BREAKOUT OF THE BASE. IN A BEAR
MARKET, I TRY TO AVOID GOING LONG UNLESS THE STOCK IS
ONE OF THE TOP THREE STOCKS IN AN INDUSTRY GROUP THAT
IS MOVING HIGHER UP THE LIST AGAINST THE MARKET. THESE
ARE VERY RARE BUT THEY DO SHOW UP (STUDY MY TOP STOCKS
FROM MARCH 2000-OCTOBER 2002)

When do you enter orders?

I ENTER ALL ORDERS TO BE EXECUTED IN THE MORNING AFTER
THE AFTER-HOURS SESSION IS OVER. IT DOESN’T MATTER IF
I ENTER DURING OR AFTER THE AH SESSION, I AM JUST
TRYING TO MAKE IT CLEAR THEY ARE NOT AFTER-HOURS
ORDERS. THEY ARE JUST BEING ENTERED AFTER HOURS TO BE
EXECUTED AT OR AROUND THE OPENING BELL.

Do you ever trade intraday?

1% OF MY ORDERS ARE ENTERED INTRADAY. THIS WOULD BE IF
A LIMIT ORDER IS MISSED AND THE STOCK IS STILL NOT TOO
EXTENDED TO BE DEEMED TOO DANGEROUS TO ADD TO. IF IT
IS STILL WITHIN A PROPER PIVOT POINT RANGE, THEN I
WILL GO IN INTRADAY AND BUY IT. THIS NORMALLY APPLIES
TO VERY THIN STOCKS AND IF YOU ARE A NEWBIE YOU
SHOULDN’T BE INVESTING IN ANYTHING UNDER $100 MIL
MARKET CAP.

What is your favorite stock?

A STOCK THAT IS MOVING UP OR DOWN IS MY FAVORITE STOCK. I DO
NOT LABEL STOCKS AS ALL STOCKS ARE BAD EXCEPT FOR YOUR
BEST STOCK AND IT IS ONLY GOOD IF IT IS MAKING YOU MONEY. IF THE STOCK IS NOT MOVING HIGHER, IT IS NOT MY FAVORITE STOCK. MY FAVORITE STOCK IS ALWAYS CHANGING. IT IS ALWAYS THE ONE MOVING THE FASTEST IN THE CORRECT DIRECTION.

When do you sell?

THERE ARE MULTIPLE ANSWERS TO THIS. WHEN I AM CUTTING
A LOSS, THE NORMAL PROCEDURE IS TO COMPLETELY CUT MY
LOSS AS SOON AS THE STOCK CLOSES BELOW THE LOW OF THE DAY OF THE SIGNAL DATE, IF IT DOES NOT MOVE HIGHER IMMEDIATELY. SINCE ALL OF MY PURCHASES COME WITH THE STOCK ABOVE THE 50 DAY MOVING AVERAGE LINE, IT SHOULD NEVER TRADE BELOW THIS INITIALLY AFTER THE PURCHASE, IF IT IS STILL ABOVE THE LOW OF THE DAY OF THE SIGNAL DATE. AS THE STOCK IS RISING, THE 50 DMA WILL CONTINUE TO ACT AS AN AREA WHERE I WILL PARTIALLY SELL SOME OF MY HOLDINGS. OTHER AREAS THAT I PARTIALLY SELL OUT OF ARE WHEN THE STOCK HITS NEW HIGHS FOR A COUPLE OF WEEKS IN A ROW ON LOW VOLUME, WHEN THE STOCK GOES INTO A CLIMAX/PARABOLIC RUN ON EXTREMELY STRONG VOLUME, WHEN THE STOCK GAPS HIGHER AFTER A LONG RUN ON VERY STRONG VOLUME, IF AFTER A LONG UPTREND THE STOCK BREAKS ABOVE A LONG CHANNEL LINE, AND IF AFTER A GAIN OF MORE THAN 200% MY
FINAL SELL WILL BE WITH A CLOSE BELOW THE 200 DAY
MOVING AVERAGE.

What is your final deciding factor in selling a stock?

IT STOPS MAKING ME MONEY OR I START TO LOSE MONEY. A CLOSE BELOW THE 200 DAY MOVING AVERAGE AFTER A VERY LARGE GAIN, A CLOSE BELOW THE 50 DAY MOVING AVERAGE OR LOW OF THE DAY AFTER THE STOCK MOVES LOWER IMMEDIATELY AFTER BUYING IT. I SELL IMMEDIATELY IF A STOCK DOES NOT WORK. IT SHOULD PRODUCE GAINS OFF THE BAT OR IT IS DELETED.

How much do you allocate to each trade?

AT THE START OF A BRAND NEW BULL MARKET THE PERFECT
SITUATION WOULD BE TO HAVE 10 PERFECT CHARTS AND PUT
10% IN EACH ONE AS I NEVER PUT MORE THAN 10% IN ANY
ONE STOCK. HOWEVER, THOSE WITH ACCOUNTS UNDER $25K MAY
WANT TO BUY UP TO AS MUCH AS 25% IN ONE STOCK IF THE
BULL IS BRAND NEW, THE FUNDAMENTALS ARE GREAT, AND THE
CHART IS PERFECT. AS A BULL MARKET GOES ALONG, I
NORMALLY DON’T LIKE TO PUT MORE THAN 5% IN ANY ONE
STOCK AS A LOT OF PERFECT CHARTS FAIL A LOT MORE
OFTEN. BY THE TIME 2007 CAME AROUND AFSI WAS ONLY 5%
AND TESO WAS 4.5% AT THE FINAL BUY. IST WAS 10%, FMDAY
8%, AND TASR 7.5% AT MY FINAL BUYS WHEN THEY BROKE
OUT. I JUST GET A LOT MORE CAUTIOUS AS TIME GOES
ALONG, SINCE MY ACCOUNT HAS GROWN. WITH A SMALLER
ACCOUNT YOU CAN FOCUS MORE BY MAKING 5 STOCKS
REPRESENT 100% OF YOUR ACCOUNT. IN A BEAR MARKET I
WILL ONLY GO 10% INVESTED IN THE EX-GENERALS OF A PREVIOUS MARKET UPTREND. MOST SHORT POSITIONS WILL BE WITHIN 2-5% OF TOTAL ACCOUNT VALUE AS SHORT COVERING RALLIES CAN BE EXTREMELY PAINFUL. I DON’T MIND BEING 100% SHORT IN A DOWNTREND. HOWEVER, I USUALLY WANT SOME CASH ON HAND FOR WHEN THE LONGS SHOW UP WITH PERFECT CHARTS. YOU WANT
TO DEFINITELY HAVE CAPITAL AVAILABLE FOR THOSE.

What about averaging down?

IF YOU HAVE A COUPLE OF BILLION DOLLARS, THIS STRATEGY
MIGHT BE WORTH A LOOK. BUT IF YOU HAVE A BILLION OR
LESS, YOU CAN MAKE A LOT MORE MONEY BY BUYING STOCKS
THAT ARE MOVING UP, SHORTING STOCKS THAT ARE MOVING
DOWN, AND BEING IN CASH DURING MARKETS THAT ARE CRAZY
AND GO BACK AND FORTH. THE BEST STOCKS TREND ANYWHERE
BETWEEN 6 TO 18 MONTHS AND THERE ARE ALWAYS GOOD
STOCKS POPPING UP IN BULL MARKETS TO ALWAYS HAVE YOUR
MONEY WORKING IN EQUITIES THAT ARE MAKING YOU MONEY.
IN BEAR MARKETS, YOU CAN ALWAYS FIND STOCKS THAT ARE
BREAKING LOWER AND CONSTANTLY MAKE SURE YOUR MONEY ARE
IN THOSE TO MAXIMIZE YOUR GAINS. WHY THROW GOOD MONEY
AT BAD? DO YOU REALLY WANT TO TRADE LIKE A
MULTI-BILLION DOLLAR FUND? CRAMER’S METHODS ARE NOT
GOOD FOR MOST. IF YOU ARE HERE, CHANCES ARE, THEY ARE
NOT GOOD FOR YOU EITHER.

Do you buy bargains? On sale?

IN THE STOCK MARKET YOU GET WHAT YOU PAY FOR. OH THE
BARGAINS OF ENRON, ADELPHIA, AMBAK, NEW CENTURY,
ACCREDITED HOME LENDERS, ENGAGE TECHNOLOGIES, CLARUS,
CITIGROUP, BEEZER, REFCO, AND SO MANY OTHER STOCKS
THAT HAVE GONE FROM 70 TO 60 TO 50 TO 40 TO 30 TO 20
TO 10 TO 5 THROUGHOUT THE YEARS. EVERY ONE A PINTO. NONE A MERCEDES. ON SALE? THEY DON’T CALL IT A FIRE SALE FOR NOTHING. MOST SALES
BURN THE STOCK TO THE GROUND. HISTORY HAS PROVEN THAT. STOCKS MAKING FRESH BRAND NEW 52-WEEK HIGHS GO ON TO MORE THAN DOUBLE THE PREFORMANCE OF STOCKS HITTING FRESH BRAND NEW 52-WEEK LOWS. HISTORY HAS PROVEN A STOCK HITTING NEW HIGHS FOR THE FIRST TIME USUALLY
KEEPS HITTING THEM AND THE OPPOSITE IS TRUE OF STOCKS HITTING NEW LOWS FOR THE FIRST TIME.

Do you buy ETFs?

YES. THANKS TO THE INVENTION OF 2X AND 3X ETFS THESE ARE NOW A VIABLE OPTION FOR USING WITH MY MARKET DIRECTION MODEL. UNDER A FULL BUY SIGNAL GOING LONG A 2X OR 3X MARKET ETF CAN PRODUCE SIGNIFICANT GAINS. THIS IS ALSO TRUE UNDER A SELL SIGNAL. UNDER A SELL SIGNAL USING A 2X OR 3X SHORT ETF CAN PRODUCE SIGNIFICANT RETURNS. THE BEAUTY OF ETFS COMES WITH RETIREMENT ACCOUNTS. UNTIL 2008 DURING EVERY BEAR MARKET RETIREMENT ACCOUNTS WERE OUT OF LUCK AS YOU HAD TO PARK YOURSELF IN CASH AND WAIT FOR THE NEXT UPTREND. NOW THANKS TO 2X AND 3X INVERSE ETFS YOU CAN NOW BUY ETFS THAT MOVE HIGHER AS THE MARKET MOVES LOWER. THESE ARE ALLOWED IN RETIREMENT ACCOUNTS AND NOW GIVES RETIREMENT ACCOUNTS A CHANCE TO PROFIT IN BEAR MARKETS.