Charts Aplenty

GBS weighs in on Compaq, Sears, Qualcomm and others.
Author:
Publish date:

What news could possibly knock the

AOL

(AOL)

/

Time Warner

(TWX)

merger off the front page of the

Washington Post

? That's right, the news that

Michael Jordan

is coming to the

Wizards

as the new head of basketball operations!

As a player, I'd be excited. As a new chieftain, uh well, I'm snoozing. In fact, I'll go out on a limb and bet he doesn't last more than two years here.

The Chartman:

TSC

message boards.

And while we're at it, it's going to be

Gore

vs.

Bush

. And, you know, I live in the D.C. area, so I know what I'm talking about!

There, lest you think I can

only

talk about my kids, I just gave you plenty of cocktail tidbits.

As for charts, we have plenty. Some tips for our newcomers. Short, sweet, nice requests with your full name go to the top of the heap. Anything else is handled by Special Assistant McCan, if you know what I mean.

My address remains

technicalforum@thestreet.com. Unless, of course, your name is Michael Jordan. Then feel free to email me directly.

Calling Compaq

Gary, This is my third long-distance letter from Pakistan. I'd like your opinion on Compaq (CPQ) , now trading at 29.50. I have been very bullish on the stock since November and I bought the shares at 19.25. Do you believe that it has turned the corner? It seems like all the bad news is behind the company. Nadeem Shaikh

Seared by Sears

Gary: I stepped in Sears (S) - Get Report at 29 1/2 on the last trading day of 1999, thinking its fourth-quarter earnings would be great! I did enjoy a flying ride until 34. After it failed to touch down at 34 twice, it pulled back to 30 3/4 in three days. Geez! I believe pullback is a must, but not like this! Could you shed some light on this one? Bach Chang

Stops on Stocks

Gary: I have made a number of investments in major companies, but have not heard too much said over one of my favorites, ASM Litho (ASML) - Get Report. I have not traded it very much, because stops on this security are not permitted! (Is this true only at Schwab or is this a general rule?) Could you please give me your opinion on this Dutch company? Thanks, Steve Erger

Steve, in fact stops are not permitted on OTC stocks. But, here's the trick: Stops are not permitted by the

Nasdaq

, but if you have a broker with the right software (such as

Ameritrade

,

E*Trade

, etc.), they

will

take stops on OTC stocks and execute them automatically.

Qualcomm

Gary: Does Qualcomm (QCOM) - Get Report fit your trendline buy approach? Cliff Konicki

Timing Trendlines

Gary: How do you know what time frame to use in tracking trendlines? Chris Morris

Chris, this is a good question and one that gets asked a lot by the readers since I do use many time frames. Therefore, let me break my answer down into two categories: the column and personal trading.

For the column, I tend to use the time frame that presents the clearest picture of what I think is going on. I also use different horizons to give readers exposure looking at charts in a variety of ways.

For my own trading, though, I like to keep things consistent. Therefore, I always look at charts in a six-month time frame. In that regard, I'm consistently comparing apples to apples. Rarely will I look at a chart in a different time frame, and only then when I'm confused. But, if I'm confused, it's probably best to pass anyway.

Entering OrbotechGary: The Orbotech (ORBK) - Get Report chart is showing some volatility recently, but the uptrend appears to be intact. Do you see this as a good entry point? Nathaniel Ayers

Second Thoughts on Cendant

Gary: I bought Cendant (CD) last week after that big, high-volume up day -- it looked like a clear breakout. Ever since then it has been slowly going down. Do you think I made a mistake? I am thinking of getting out. Emanuel Tabachnik

Cobalt Networks vs. CacheFlow

Gary: My TA questions revolve around Cobalt Networks (COBT) or CacheFlow (CFLO) . They both exhibit strikingly similar patterns. Both are two months old. Both broke badly from seeming support and have fallen to a new possible "support" level. I suppose you might say "wait for a break and trade in that direction." Or pick a direction and use a tight stop. Could you pick one and do your thing? Bruce Lulla

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 held no positions in any securities mentioned in this column, although holdings can change at any time. 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@attglobal.net.