Rolling stocks: AMAZINGSTOCKS.COM

The AMAZING Rolling (Channeling) Stocks tutorial!

     Imagine: high profit potential, lower possible risk!

So, you want an UNFAIR ADVANTAGE over other investors? Let's begin!

The stock at the top of your screen is a "Rolling (Channeling or Price Pattern) Stock". A similar concept for this type of trading is "Swing Trading", with a few differences. In this example the rise in share (the stock's) price from $1.25 to $2.50 represents a potential profit of 100% EVERY TIME THE STOCK "ROLLS" up (positive swing) from the 'BUY level' (lower 'L' channel, or support) to the 'SELL level' (upper 'U' channel, or resistance)! Note that the support line cuts through the bottom of the rolls, and the resistance line cuts across the peaks. If you're into selling stocks short, you can also make a large potential profit EVERY TIME THE STOCK "ROLLS" down (negative swing) from the resistance to the support! Just imagine playing the rolls (options or not) on penny, small and mid cap stocks like these!!!? Diversifying between these more 'predictable' stocks tends to reduce risk, while increasing profit potential.

If you were to throw darts at the Wall Street Journal, typically half the stocks would go up and half down that day, assume a 50/50 chance in your favor. What would you give to swing those odds in your favor?

Why don't all investors buy and sell stocks this way?
(1.) Most investors will always purchase stocks for the long term hoping they increase in value, especially (2.) 'institutional' investors who are limited in their abilities to buy and sell stocks at will, and (3.) brokerage firms don't want you to know this method, as it removes their investment advantage over you and probably their investors as well... brokers are not allowed to rapidly buy and sell your stocks for you as it's considered possible 'churning' for commissions! With their hands tied, you could 'clean' their house! Immoral? No. As you can see the 'buy and hold' investor may wait quite a while to make money while YOU'RE reaping THEIR potential profits - quickly! The bottom line: here is a TREMENDOUS advantage to the individual investor with only basic know-how, which otherwise belongs to the traders! Most investors will NEVER learn this investment method (made popular by a multi millionnaire stock market genius), so there will always be incredible market opportunities to monopolize on!

Generally these stocks are purchased using a 'stop limit order' as the price of the stock rises from BELOW the 'L' line to meet that line. The reason for this is to help you avoid the common mistake of purchasing as the stock price declines without any sign that the downward trend has ceased. Immediately after purchase you should place a sell order through your electronic online brokerage firm such as Scottrade (see our link on the stock reports) to automatically sell all of the shares at the price represented at the 'U' line. This is to prevent you from holding onto the stock, or overestimating stock performance in an attempt to squeeze out additional profits, which often results in lesser profits, as the logical threshold is missed. Isn't it better to reinvest the profits, diversifying into new rolling stocks in a 'ready-to-buy' position which are NOT overbought (overextended), are truer values, and therefore present lower risk? Another common novice mistake is to become captivated with the stock performance of one company. Here's a good way to miss many golden opportunities in the market. Avoid these mistakes!

The Worden Report (Friday, October 20, 2000)
~ from TC2000® ~

Lady Guinevere on Support & Resistance

Lady Guinevere was the first lady to sit at the Roundtable of Knights Who Think for Themselves. Consequently we named her after King Arthur's wife. We thank her for this carefully prepared dissertation, and we are sending her the familiar orange-labeled bottle: Veuve Clicquot Ponsardin. -DW

Dear Don, [9-12-00]

It was interesting to note that some of the recent Worden Reports featured discussions on my favorite basics; volume, trendlines (Squire Trendtrader), and MA's (Sir Example and Sir Smoothcharts). There is one more important basic which should be mentioned - support and resistance levels, and I would like to contribute this brief dissertation on this subject.

Thomas A. Myers, The Technical Analysis Course, defines the two as, "Support is a price level at which there is adequate demand for a security to stop its downward price movement, and normally, turn prices upward. Resistance is a price level at which there is a significant supply of a stock causing prices to halt an upward move and, typically, turn prices down."

Steven Achelis in Technical Analysis from A to Z says, "Support levels Indicate the price where the majority of investors believe that prices will move higher and resistance levels indicate the price at which a majority of investors feel prices will move lower."

Why are support and resistance important? They can be a tremendous help when setting a buy price, a sell price, or a stop loss price. For instance, Mrs. SC from 8/17 mentioned her STJ problem. She said she bought STJ at approximately $35.00, which had to be sometime in the latter part of May. The down gap occurred on 8/16, dropping the stock to a close of $37.25 on 8/17 with a low of $35.69. I am not going to discuss why SC did not sell long before the down gap (DW did this at length), but as long as she had waited this long to sell, if she had noticed there was a strong support level at about $35.50-$35.60, she could have waited one day when the stock jumped back up to a close of $39.19. If you set the chart at daily with a log scale, zoom 5, and draw a straight horizontal trendline this can be seen graphically.

Primary resistance levels can be found the same way by drawing a horizontal trendline along the highs when you see many of them seem to stop at a certain level. Bring up ADCT, and set daily, log scale, zoom 5. Draw a horizontal trendline just a tad above the 38.06 mark ($38.50 actually).

Notice this line is BOTH a resistance level and a support level. This is an important characteristic of support and resistance. Once a security breaks through a support or resistance level, the line becomes its opposite; i.e.; if a stock breaks up through a resistance line, the line then becomes a support line.

Look at ADCT. In the first part of June the line you drew represented a resistance level, then 6/9 ADCT broke up through the line, which then became a support level. It was a good support level until 8/23, when the stock fell through its support, and the support became a resistance level. ADCT broke up briefly 8/29, but fell back again, and seems to have found more support at about $35.50.

Trendlines and MA's also can be support and resistance levels. Take a look at CGO and plot a MA13 and MA34. Notice how the MA's offer support and resistance. Plot a long-term trendline for DJ-30 from the low in October '99 to the March 2000 low. Follow the right extension to the present and go to zoom 3. Notice how many times the price has touched or approached the trendline.

For more on support and resistance, I refer you to the two authors I mentioned earlier plus Martin Pring, Technical Analysis Explained, and if you like candlesticks, "Beyond Candlesticks" by Steve Nison. -NC (Lady Guinevere)