"What goes up ... must come down. Spinning wheels keep spinning around. Forget all your troubles, it's a crying shame ... ride a painted pony let the spinning wheels spin..." Who did that song, anyway? Or, better question, who did it without my no doubt mangled lyrics?
Anyway, it's Wednesday morning as I write this, the futures look limit down, so it could be ugly. But, you know this market: By Saturday, everything could be up again, and we could be scratching Dow 10K.
My only advice: continue to stick to your methodology. I am getting an awful lot of emails from folks who say they're switching trains, changing plans, etc., because, baby, they have to take advantage of those Internet stocks! Well, just remember: as they say in golf, it's no big deal being a long-hitter -- the woods are full of them.
But you know, "Go your own way." (Yes, I know,
.) Just remember, I have only one motto I stand by: Often wrong, never in doubt!
And speaking of doubt, I was curious how the chart preference survey would turn out. I thought the new pop-up charts would win, but I received a number of emails voting the other way. The numbers tell all though: pop-up charts ruled two to one. But, remember, any problems: send an email to
email@example.com. They really do want to help!
One Good App
Gary, I have used a spreadsheet to track my performance for the past one and a half years. But this past year I added large amounts of capital to my account at two separate times, and it makes calculating the year-end performance numbers a little tricky. I just thought you might know of at least one software package to handle accounting for traders like us. About all I have heard of is "Advent" but that is a large application designed for and sold to big shops. Maybe someone out there might know something? Rick Rhodehamel
Rick, I'm also a spreadsheet man, but I know many readers are not. Anyone know of a software product designed for traders to track performance?
Mr. Smith, Do you have a book describing your methods for reading charts? If not, can you recommend an alternate source? Scott Shaw
Scott, currently there is no Gary B. Smith tome, but I've been toying with the idea. Here are the pros and cons:
- It takes advantage of market mania, which probably means it would sell.
I'd raise my name recognition, which would invariably be good for me as a columnist now and in the future.
It would raise the name recognition of
TSC, which would help both me and
- Let's face it, it's total vanity.
If the market crashes prior to my publication, it'll collect dust on the bookstore shelves.
It's a ton a work. Yuck.
What would be different in the book than in my column? Probably nothing.
So, Scott, right now I am undecided. Maybe sometime down the road.
Fortunately, though, you don't have to wait for my immortal words. Check out my book
column of Dec. 2. Plenty of good reading there.
A Chart's Worth
Gary, Just read Saturday's column. The new charts are great! I believe they are right when they say a picture is worth a thousand words! I enjoy your column very much. Just started real trading with your system and first trade was Imaxundefined. Bought on Jan. 5 at 31 5/16. And it hasn't done much yet but it hasn't stopped out. Could you give me your opinion on it? Thanks for the great column! Ed Gildone
Click here for IMAXF chart
Click here for MXIM chart
Gary, In your column today you mentioned that you run a "scan" using TC 2000. Can you share what you are scanning for? Is it one particular item or several? Also, can you share your thoughts on the Acclaim Entertainmentundefined chart? Tony Benincasa
Tony, I always scan for the same thing: a breakout, on heavy volume, from congestion. This can either be a break up (a long candidate) or a break down (a short candidate). As for AKLM, see the attached chart.
Click here for AKLM chart
You want sideways movement before a breakout in Internet, how about Exciteundefined, Inktomi (INKT) or MindSpringundefined to name a few? Thanks. Matt Brody
Click here for MSPG chart
Click here for NKE chart
Dear Gary, Finally found an Internet company that makes money, TMP Worldwideundefined, known for its Monster.com Web site. Trading volatility has been wild. Wonder if you could look at the chart -- it hit a new high this week and I wonder if it is the beginning of something great. Hear that even the Net Queen loves it. Thanks very much and very healthy and profitable 1999. Rich Knopf
Click here for TMPW chart
How Low Do You Go?
Gary, Question: Have you ever played with another model aimed at stocks that trade for less than $20? Most of these stocks would have greater volatility most of the time and the 5% target would be achieved more quickly, but net the trader small dollar returns. Have you ever played with a model for this class of stocks that had a 10% target and retained the 6% stop loss? Any other models for lower priced stocks? Mark Zabell
Mark, when I first started trading, I did in fact trade stocks at all prices, many even under $10. However, as I refined the GBS techniques, I found my win rate was much higher with the more expensive stocks. The reason: As you point out, the percentage swings in lower-priced stocks were too broad for my 5% to 6% money management techniques. So I either had to have a new set of rules for less expensive stocks (similar to the example you gave) or eliminate them from my candidate list. I chose the latter for three reasons. One, I thrive on simplicity, and one set of rules is as simple as it gets. Two, my results and dollar returns are fine, even though I eliminate a lot of stocks as candidates. Three, by eliminating a lot of candidates each day, I make less trades and cut down on my commission charges.
Dear Gary: Hello. I've been spending a lot of time lately learning more about reading charts. Oxford Health Plans undefined, has been very active for the last six trading days. Several analysts have this stock peaking at 50 in 12 months. Can you please check out the chart? Evan Hoffman
Click here for OXHP chart
Gary B. Smith is a freelance writer who trades for his own account from his Connecticut home using technical analysis. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks.