A Close Look at the Fab Four

Gary offers a little insight into how he would trade that band of daytrader idols: America Online, Microsoft, Cisco and Amazon.com.
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OK, want to know the question I get asked most often? It's "What do you think about

America Online

(AOL)

?" That's right, that's the winner for the past week, the past month and the past year!

In runner-up spots, though, are

Microsoft

(MSFT) - Get Report

,

Cisco

(CSCO) - Get Report

and

Amazon.com

(AMZN) - Get Report

. (Hmm, whatever happened to

Dell

(DELL) - Get Report

? Oh well, guess that's old news now!)

So, today, a review of those four stocks, but broken down in a different way. Instead of glib, superficial comments, I'll have glib, superficial comments along with my thoughts on exactly how I'd trade these monsters. You'll have my exact thinking on when and if I'd go long, short or maybe even both!

This is as close as I can take you inside the GBS trading mind, which, trust me, is not a pretty sight. Nevertheless, this column is sure to be a collector's item, so remember -- clip, save and follow up. If I'm right, then, of course, kudos and accolades are due. And if I'm wrong, well, I hope you have the common decency to keep your comments to yourself!

OK, what do all these have in common? A few things. One, I always draw my lines by hand and come up with a hypothesis of what's going on. Is AOL really in a downward trend channel? Beats me, but that's my take. Same idea with Cisco. Is it really pulling back after a breakout? I think so, but others could argue differently.

The key, though, is it really doesn't matter. In every case, I picked a spot to go long or short and set a fairly tight stop below (or above, if I was short) my entry point. In that way, if I get stopped out, well, I was wrong, and I move on. At least I don't lose too much. And if I'm right, then I have a pretty good trade for fairly low risk.

Remember, you will

never

be right all the time. Heck, even 50% of the time is great. But just keep giving yourself an edge, and, over time, you'll find yourself solidly in the black.

Gary B. Smith is a freelance writer who trades for his own account from his Maryland home using technical analysis. At time of publication, he was long Cisco and Amazon.com. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Smith writes five technical analysis columns for TheStreet.com each week, including Technician's Take, Charted Territory and TSC Technical Forum. While he cannot provide investment advice or recommendations, he welcomes your feedback at

gbsmith@ibm.net.