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ARCHIVE:    JUNE-NOVEMBER 1999  

An InvestorLinks article
distributed every market day.

Coca Cola Co (NYSE: KO)
Market Call™ for November 29, 1999
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.

Focus on Exit

When a trade entered goes as planned, the next step is to exit the trade. If you are following a trend following method such as crossing moving averages, MACD signals, or Momentum, these indicators will also be you trigger to exit.

Many methods will keep you in a stock either long or short. Other methods will use one or more indicators just for exit, and another for entry. I believe that there is not enough focus on the exit of a trade. The exit locks in profits or keeps losses small. The stop should take you out of a trade with a small loss. The next question is "When to exit a profitable trade?"

Let look at our chart below for Coca Cola Co. (NYSE: KO).

After a major decline in going back to June 99, KO reversed this downtrend in early October and has started moving up again. KO has had a series on channel consolidations and then has been breaking out to the upside over the past couple of months.

The most recent breakout was on November 17 at the 59-price level and KO moved up sharply to the 68 area. Any of the indicators we watch each day in this column would have confirmed the last move. It broke a 20 period channel high, moving averages crossed up to a Buy, Momentum and OBV (On Balance Volume) all were confirming higher prices.

There are many stocks with similar patterns. Some in the same sector such as PEP.

As we look at the chart below, we see all of the indicators we use, warning of a possible change in trend. When does a trader exit KO?

The MACD has already issued a Sell signal. Momentum has turned down. OBV has stopped increasing. If KO drops in the first hour of trading Monday, it too will signal a Sell signal. A 20 period low will be broken on a down move Monday.

If KO drops below 65 � Monday, I would exit longs in KO. I do not want to risk a major change in direction. Only an aggressive trader would also consider a Short at 65 �. Remember that the pattern has been to channel, and then move up. KO may go into a channel and may not change directions. If a Short is entered, I would place a tight stop at 68 /3/8.

Chart courtesy of
Silicon Investor
 


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: March 17, 2001

Published By Tulips and Bears LLC