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Author: VyckieB Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 6326  
Subject: Re: CDIC Date: 1/3/2005 9:25 PM
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Hi dt! Actually, your post along with QuillandPen's is really what got me started so I'm sure you already know tons more than I do about all of this. I'll try to reply although I am not familiar with all the TA terminology - hopefully you'll know what I'm talking about.

dt: Would you care to share your reasoning for buying HOFF? One thing that jumped out to me on this chart was the gap down in early November and the gap up in late December.

me: I took the gap up as an indication that HOFF was going up - also I saw that little red dot at the bottom of the stockcharts.com chart - previously all the little red dots were on top of the candlesticks moving down - then suddenly there appeared one lone little red dot down at the bottom. I waited for the price to drop after the initial gap up and then made my purchase. Now there are three little red dots - all going up, up, up. When I see a little red dot at the top, I'll sell.

I'm calling this "little red dot" analysis ;-) Another of my holdings - MSC - has been in an uptrend for a while - notice all the little red dots going up? Today, one little red dot appeared at the top of the chart - I'll be selling this one tomorrow and taking my profits.

dt: What makes you believe these stocks are ready to take off? Again, DLGS had a pretty significant gap down in mid-December. The MACD is showing signs of a crossover but it hasn't happened yet. The ADX is not looking real good, although the -DI has crossed under the ADX line.

me: DLGS - okay, no little red dots at the top, but I'm looking for one to appear any day now and that most likely is when a gap up will occur. I'm using your chart along with this one from QuillandPen:

http://139.142.147.218/StockChart_ImageOnly.dll?cus=0&co=ask&i_chart=0&inm=5&ind=2&idx_sym=&sb=dlgs&cn=us&size=1&ind2=-6&inm2=-1&ty=1&sca=1&chk_mov=on&mov1=10&mov2=50&mov3=0&boll=0&lin=0&chk_vol=on&rsi=8&chk_sto=on&sto1=15&sto2=5&sto3=5&wil=12&chk_macd=on&macd1=12&macd2=25&macd3=9&roc1=16&roc2=8&mfi=14&rsc_sym=INX&ref_rate=180

(Sorry - I don't know how to make that link clickable.)

This chart shows that the %K just went above the %D and the %D is headed for the 20 on the stochastic chart which is when the stock is oversold. Also, on the MACD - the red lines are moving above the blue line which happens when the price is going up. This looks to me like several favorable indicators that the stock is going to gap up soon. I thought I'd buy in before the %D hits the 20 as that's when the big moves tend to occur.

INFO - see the two little red dots going up at the bottom of the chart? Also, the 10 day EMA just crossed above the 50 day EMA, the %D recently went over 20 and on the MACD chart the red lines are rising above the blue line.

Okay - this is not probably true TA, but I like it so far.


dt: The run up in mid-December looks like it failed to break resistance. The MACD is crossing below the signal line and the MACD-Histogram appears to be heading below 0. The ADX appears to be moving towards a bearish crossover but it is still a bit apart. Right now, my initial reaction is that this stock will be heading down and may bounce around for a bit.

me: that's what I was thinking too - but ... no little red dots appearing at the top yet. Maybe look for a red dot in a day or two ;-)

dt: One thing that I noticed is that all of these stocks are essentially penny stocks. Is there a particular reason that you are focusing on such cheap stocks? From what I have been reading, there is usually a reason that a stock is priced that cheap. In addition, with the cheap stocks like this, the volatility is usually much higher and the stocks can crash down as quickly as they rise up.

me: I can afford these cheap stocks! Since I'm only intending to hold these for a short period of time, the fundamentals are not really relevant to me. The volatility is useful if I can play on it and use the charts to help me get out at the top - if I miss the top, I can ride out the downtrend and get out at the next peak - hopefully ...

dt: Feel free to share your thoughts/reasoning on the purchases that you have made and ones that you are considering.

me: Thanks so much for your feedback! Sorry that my technical analysis isn't more technical ;-) I'll try to let you know how I do. I have set up a mock portfolio where I'm tracking a few others short term. HOFF, DLGS, and INFO just seemed compelling enough that I went ahead and used real money - not much - and if I lose it, I won't be out the grocery money ;-)

Vyckie
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