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Ask The Trader
Wednesday, December 20, 2000

Let's Review A Recent Play Pick: Take Two


What happened to Concord EFS?


Last week we took a closer look at a successful trade in Quest Diagnostics (DGX). This week we will dissect a trade gone bad in Concord EFS (CEFT) to see what else we could have focused upon from the outset. Not everyone can get it right all the time, not even the crack staff and editors of Splittrader.com. The important thing, however, is that we all take the time to learn from our losers.

With the CEFT trade, we were correct in picking the stock on a breakout from a base. However, as in any trade, not all the technical indicators were in our favor at the time. In hindsight, the key items to take away from the trade were that volume on the breakout was good but not stellar. Volume should be close to two times average volume to verify that institutions are buying right along with the little guys.

In addition, the base from which the stock had emerged from was not as tight as you would like to see. Ideally, a base should be narrow in range and slightly down sloping to shake out weak holders before the stock starts another run. The last technical indicator that is less important to see, but that was lacking in the CEFT trade nonetheless, was a close at the high of the day to confirm buying interest.

Good Luck and Have a Profitable Trading Day

Craig Seidler
Assistant Editor

 


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