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ARCHIVE:    JUNE 1999-SEPTEMBER 2000  

An InvestorLinks article
distributed every market day.

Oracle Corp  (NASDAQ: ORCL)
Market Call™ for October 4, 2000
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 the markets continue to decline, especially the NASDAQ, more and more stocks are breaking support. The rally of last week looks more like real window dressing than any new buying.

Many stocks are hitting 52 week lows. Although there was early optimism about the FOMC meeting, that faded fast.

Consolidation Patterns

The market value of a stock is a determined by pure supply and demand battles between Bulls and Bears.

This supply and demand is constantly changing on a minute by minute basis. There are probably hundreds of both rational and some irrational factors that play into a stock movement.

I believe that stocks move in trends that can last for a long time. During these major trends, minor counter trends do develop and the trader tries to take advantage of movement both to the up and down on stocks.

It is also very common to see stocks trade in a range until supply or demand factors resolve themselves.

It is moves from these consolidation areas that present some of the best trading opportunities.

These consolidation patterns can take the shape of rectangles, symmetrical triangles, ascending triangles, descending triangles, flags, double tops or bottoms and even triple tops and bottoms, head and should formations and rounding tops or bottoms.

It sometimes amazes me how the stock market follows the same crowd behavior and keeps repeating these patterns over and over again. The basic nature of the markets fear and greed exhibits itself everyday.

Let’s examine one of these formations.

Let’s look at a rectangle formation in Oracle Corp.

It is too late to trade this stock, but it makes a perfect example of support and resistance breakdowns.

For the past week, ORCL has been in a consolidation range between 79 and 82. Today, October 3, 2000, ORCL broke down bad. This was despite an analyst upgrade this morning.

After the first 2 hours of trading, ORCL broke below support at 79. This is the area an exit and/or short should have been initiated. ORCL continued to fall the balance of the day finishing at 69 �.

As I mentioned, it is too late to trade this pattern, but I want to show you this today as an example of how a breakdown should look.

Make sure you are watching your stocks for this pattern. Stocks that are breaking down, tend to keep breaking down.

Chart courtesy of
 


Interested in adding Market Call to your website?
Click here for details: Market 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.

 
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Last modified: October 29, 2000

Published By Tulips and Bears LLC