Network
Appliance (NASDAQ: NTAP)
Market Call™ for January 22, 2001
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.
As a short term Day Trader I am always asking myself the question of
"Do I
want to be Long, Short or Out?" I am concerned with my stop when in a
position and looking for a reason to exit any position. If I stay in
a long
position, it is because the stock is moving up and doing what I expect
it to
do.
Each position needs an exit and the repeat patterns that
show up give a
probability message to act.
Pattern Recognition - Traders
Remorse
When using technical analysis pattern recognition or an indicator for
trading, the time frame and price should work with any priced stock or
in
any time frame.
Technical analysis attempts to predict future price behavior by
measuring
the crowd psychology in many cases and the strength of the opinions,
fear
and greed of traders and investors. The more participants in the
crowd may
often result in a higher percentage of accuracy. The same patterns
do work
with low priced stock, especially when volume accompanies the start of
a
breakout or reversal in a trend.
Since most traders are trading many of the widely held issues, this
column
focuses on many large name stocks that trade over a million shares a
day.
Let's look at Network Appliance,
NTAP.
A pattern that I call Traders Remorse occurs when a stock that has
been
moving up, gaps up in the morning, only to see the stock close down in
heavy
volume at the end of the day.
Many times this will signal the end of a short term up move.
NTAP is an example of possible Traders Remorse at work.
After a Buy signals on January 16, 2001, NTAP moved up nicely. On
Friday,
January 19, NTAP gapped up in the morning to open up at 70 7/8 on
heavy
volume. Immediately, the stock moved down almost 3 points. A second
rally
attempt to get back to the morning high was meet with selling and late
in
the day more selling accompanied by increased volume brought NTAP to
close
on the low of the day.
This 1 day pattern has a good probability of being a negative pattern
as the
traders who bought early had a case of Traders Remorse and profit
taking
started in.
I would exit longs in NTAP and look for another entry long at the next
Buy
signal.
An aggressive trader may want to Short NTAP here on any morning
weakness,
I would place a Stop on a Short at 69 �.
Do NOT exit or Short if NTAP gaps up in the morning.
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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.
Copyright �
1998-2000 Tulips and Bears LLC.
All Rights Reserved. Republication of this material,
including posting to message boards or news groups,
without the prior written consent of Tulips and Bears LLC
is strictly prohibited.
Last modified: January 21, 2001
Published By Tulips and Bears
LLC
