Concord
EFS Inc (NASDAQ: CEFT)
Market Call™ for January 9, 2001
Contributed by Mark Seleznov, TrendTrader.com.
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.
Selling Short into a Retracement, Focusing on Entry
Many times investors enter a trade in the correct direction, but due to poor
time of entry they get stopped out of the trade. Although not as crucial as
exit, the short-term trader in particular who can modify their trading plan
to narrow the point of entry into a trade can prevent entering a trade and
finding oneself immediately losing in the trade. In addition, a more
defined entry can increase your percentage winners by helping you not trade
those stocks that may have prevented in losers and reduce the amount of
slippage on stop orders
Concord EFS, Inc. (CEFT).
CEFT has had an extremely nice increase over the past 9 months ($18 to $48).
On December 29th, CEFT began a slide from $46 down to $38 on January 5th and
8th, possibly signaling a change in the long-term trend. At the end of the
day of the 8th, CEFT closed above 40 for the first time since January 3rd.
Looking at our moving averages and MACD we are being shown a clear buy
signal, but our objective instead will be to make an educated determination
as to where this retracement to the upside might end so we may sell into
strength and limit our risk on the trade.
The most common way of determining retracement levels in technical analysis
is through use of support and resistance using trend lines. Unfortunately,
this does not always provide very tradable levels, especially for short-term
trading.
One of my favorite ways of determining retracement levels is by using
Fibonacci trend lines. Fibonacci trend lines break a full move up into
retracement levels at 38.2%, 50.0%, and 61.8% (Those with TORS software can
find this feature by right clicking on their chart, select “Trend Tools”,
and Fibonacci). In this case, I have drawn the Fibonacci trend lines from
the 12/28/00 high down to the 01/04/01 low of 36 11/16.
This provides us with retracement levels of 41 1/16 (38.2%), 42 7/16 (50%),
and 43 � (61.8%).
I would sell short CEFT at 42 3/16 and place a buy stop at 42 11/16. This
minimizes my risk to � point. In addition, if I got stopped out I would not
be shy to try again at 43 7/16 and risk to 43 15/16. Since all of these
strategies would require the stock to continue upward to those levels, an
investor may choose to have several stocks in which they are looking to sell
or buy at Fibonacci retracement levels.
Interested in adding Market Call to
your website?
Click here for details: Market
Call Information
Mark A. Seleznov is a General
Securities Principal and Managing Partner of Trend Trader, LLC, a NASD, SIPC broker/dealer firm located in
Scottsdale, Arizona. A professional trader for over 25 years, Mark was a Market Maker on
the Philadelphia Stock Exchange, a Retail Registered Representative, and futures trader.
Mark is an author and recognized expert in equity Day Trading. He conducts seminars in
Equity Day Trading and offers his firm traders training and support. If his firm holds any
positions in the public companies he writes about, it will be noted at the bottom of his
article.
Market Calls is a daily syndicated column on trading by Mark A. Seleznov, Managing Partner
of Trend Trader,
LLC. For information on obtaining Market Calls for your web site,
newspapers, or publication, contact Trend Trader, LLC at 602-948-1146
Disclaimer: Trading in securities may not be suitable for
all individuals. Consult your broker or other professional to determine your suitability.
This is not an offer to buy or sell securities. The advice given above is of a general
nature and should not be taken as a recommendation to buy or sell the referenced security.
Copyright �
1998-2000 Tulips and Bears LLC.
All Rights Reserved. Republication of this material,
including posting to message boards or news groups,
without the prior written consent of Tulips and Bears LLC
is strictly prohibited.
Last modified: January 08, 2001
Published By Tulips and Bears
LLC
