Ask The Trader
Tuesday, September 05, 2000
A look at Trendlines
"The trend is your friend," is one of the oldest trading maxims, not to mention one of the most useful. Identifying what the trend is and when it has turned is a basic, yet essential, part of investment strategy. Trendlines are one of the best ways to uncover what the trend is doing.
Simply put, a trendline in nothing more than a straight line, drawn between two adjacent points. The first of these two points will be either the highest high or lowest low, while the second point will be the lowest high prior to the lowest low, or the highest low prior to the highest high. It's imperative that the trendline is not violated between these two points. Trendlines are strengthened and confirmed the more times that they are touched without being violated. They also become more significant over time. For example, a trendline that has not been broken for several months is much more likely to hold over one that has formed in the last few weeks or days.
Keep in mind, though, no individual trading tool will work every time, but a combination of tools will help to improve the chances of a profitable play.
Ok, on to this weeks charts.
What's your take on NPNT? The company seems pretty interesting and I noticed that the stock has a lot of quick runs. I would like someone to point out the resistance levels please. Thanks, al
As a "pure play" DSL stock, NorthPoint Communications (NPNT) certainly fits the bill. Based in San Francisco, NPNT is currently building a global network for high-speed Internet access and streaming content to consumers and businesses around the world. Focusing exclusively on DSL-based networks, NPNT plans to make DSL available to half of all homes and businesses in the U.S. by the end of this year. As you mentioned, this stock does produce its share of strong moves, which is shown on the chart below. An advance or decline out of NPNT's tight range could trigger the next move.
I have a question on six stocks. I sold the following stocks on Aug. 7 before Cisco's earnings, thinking the stocks would fall. The stocks are Cisco, Exodus, Orcle, Nortel, SunW, and EMC. I was wanting to buy them back at a lower price, but all went up except Cisco. I did get it back.
Thanks for your thoughts!
We'll hit one more stock from Ken's list last week. EMC looks to be an interesting pick from that list and may currently be facing a potential turning point at the century mark.
As computer related equipment and software are requiring greater storage capacities to run products, EMC is benefiting by providing a wide range of storage-related hardware and software. The demand for these storage systems, which currently store data from all major computer platforms, has allowed EMC to lead this group. Investing in industry leaders has proven to be a successful strategy, as witnessed by EMC's strong summer performance relative to the NASDAQ Composite Index.
Good luck with your trades!