Aeroflex
Inc (NASDAQ: ARXX)
Market Call™ for January 29, 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.
If you are going to Day Trade, the ability to have real-time up to the
minute charts with these indicators will be important to your success.
As we saw Friday with our Market Call of SANM, the anticipated trade
happened
not early in the morning, but later in the day, and using our
moving average method discussed here, would have you closed with a
profitable
position and entering the stock in another direction.
Today's Market Call should have been entered Friday. The close is at
the
entry price level and it should continue moving up Monday.
Moving Average
Crossovers
Moving averages are one of the oldest and most popular technical
analysis
tools.
A moving average is the average price of a security at a given time.
When
calculating a moving average, you specify the time span to calculate
the
average price for X number of periods. For example, 20 periods.
These
periods may be 5 minute bars, 15 minute bars, 60 minute or daily
bars).
The classic interpretation of a moving average is to use it to observe
changes in prices. Investors typically buy when a security's price
rises
above its moving average and sell when the price falls below its
moving
average.
The moving average crossover method calculates two moving averages,
each
based on a different number of periods of trading data. When the
shorter-term (fewer days) average crosses above the longer-term
average from
below, this is a buy signal for tomorrow's open. When the shorter-term
average crosses below the longer-term average from above, this is a
sell
signal for tomorrow's open.
The current charts we are using calculate a 5-period and a 20-period
exponential MA of the closing prices on 60 minute bars. If the
5-period MA
crosses above (becomes greater than) the 20-period MA, you would buy
the
next bars opening because the system is saying that an uptrend has
begun.
You maintain this long position as long as the 5-period MA is greater
than
the 20-period MA. When the 5-period MA crosses below the 20-period
MA, the
trend is now down and you would liquidate your long position and
establish a
new short position on the next bars open.
Let's look at Aeroflex Corp,
(NASDAQ: ARXX).
A nice rise from January 18 through the 24th would have had us long
ARXX.
An exit would have occurred on January 24 and then allowing ARXX to
retrace
the big move through Thursday and early Friday.
Notice the low Thursday is above the lows of the 18th indicating a
retracement and not a downtrend.
As you can see from the chart, a new Buy signal on Friday now has us
long
ARXX again.
I would be long on any small range open on Monday.
Do NOT enter if ARXX gaps down Monday.
I would place my stop at 27 3/8 and allow my indicator to tell me when
to
sell as ARXX moves up.
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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 29, 2001
Published By Tulips and Bears
LLC
