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ARCHIVE:    JUNE 1999-OCTOBER 2000  

An InvestorLinks article
distributed every market day.

International Business Machines  (NYSE: IBM)
Market Call™ for October 30, 2000
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.

Many stocks are attempting a recovery while some stocks continue to fail every rally and look like they may disappear into oblivion.

As we have shown in this column many times, the time frame you are trading is critical in know where you are in a possible technical pattern. Our hourly charts can look one way, while a daily another.

Moving Average Crossovers

Moving averages are one of the oldest and most popular technical analysis tools.

A moving average is the average price of a security at a given time. When calculating a moving average, you specify the time span to calculate the average price for X number of periods. For example, 20 periods. These periods may be 5 minute bars, 15 minute bars or daily bars).

The classic interpretation of a moving average is to use it to observe changes in prices. Investors typically buy when a security's price rises above its moving average and sell when the price falls below its moving average.

The moving average crossover method calculates two moving averages, each based on a different number of periods of trading data. When the shorter-term (fewer days) average crosses above the longer-term average from below, this is a buy signal for tomorrow's open. When the shorter-term average crosses below the longer-term average from above, this is a sell signal for tomorrow's open.

The current charts we are using calculate a 5-day and a 20-day exponential MA of the closing prices. If the 5-day MA crosses above (becomes greater than) the 20-day MA, you would buy tomorrow on the opening because the system is saying that an uptrend has begun. You maintain this long position as long as the 5-day MA is greater than the 20-day MA. When the 5-day MA crosses below the 20-day MA, the trend is now down and you would liquidate your long position and establish a new short position on the next day's open.

Let’s look at Int'l Business Machines (NYSE: IBM).

On an hourly chart used in this column, IBM flashed Buy signals on the moving average crossover method.

I do not think it is too late, and if IBM opens unchanged or up Monday, would still consider a purchase on the stock.

However, the daily chart on IBM looks very negative with most indicators pointing down. Since a trade here on IBM on a 60 minute chart allows a great flexibility in managing risk than a daily, IBM may still have a nice counter trend rally in a major down trend.

On an hourly basis, we also a small Head and Shoulders bottom forming with a neckline around 94.

I would Buy IBM here on an up or unchanged open I would place a stop at 91 7/8

Do NOT Buy IBM if it gaps down Monday morning.

Chart courtesy of
 


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.

 
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Last modified: October 29, 2000

Published By Tulips and Bears LLC