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.
Let's look at an exit strategy for Intel Corp. (NASDAQ: INTC).
On February 4, 2000, INTC broke to new highs breaking above 105.
INTC retraced the breakout on February 7, and then moved up to 110.
This is normal action in a breakout. However, at this point, INTC should
breakdown and move lower than this breakout point.
INTC was off all day Wednesday, February 9th, and closed at the low.
A trader needs to focus on exit and have a plan if INTC continues lower.
If INTC breaks below 104, I would exit longs in INTC.
An aggressive trader may want to consider a short position below 104
If a short is entered, INTC should continue down based on these signals. As
always, use stops.
I would place my stop on a Short at 108.
