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 look at our chart below on Motorola, Inc. (NYSE: MOT).
After continually making higher highs and lower lows on the way up to 184
which was reached on March 6 and March 7, MOT is now a chart with lower
highs and lower lows.
The decline from March 7, 2000 brought MOT down to 163 �.
MOT then rallied to 179 on the 10th, a point lower than 184.
The next decline brought MOT today to a low of 165 � at today’s open. A
rally attempt saw MOT move to 177 1/16 before collapsing again to close at
167 �.
If the low of today at 165 holds, then another attempt to take out the 177
1/16 high may put MOT back in an uptrend.
If MOT continues to fall, I would want out before the stock breaks down.
MOT is a stock that can move in a large range.
If I were long the stock, I would place a stop to exit at 163.
Only an aggressive trader may want to consider a Short below 163. If a
short below 163 were entered, I would place a stop on the Short at 168.
