Applied
Materials (NASDAQ: AMAT)
Market Call™ for August 21, 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.
I am neither a Bull nor a Bear. I want to take planned low risk trades and
exit them with a small loss when I am wrong, and let profits run when I am
right.
I am always more concerned with the loss of capital than I am with return on
capital, This is why exit is so critical,
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 our chart below on Applied Materials, AMAT.
Some people may think that a move in a stock from 66 to 86 in 6 days is great
and normal. These winners do occur, however planning exit is still needed
all the time.
Using the MACD indicator, breakouts, or crossing moving averages, a trader
would have bought AMAT on August 11 in the low to mid 70 areas.
AMAT has had a spectacular rise and now a trader needs to focus on the exit.
The MACD has already signaled to close the trade and take profits.
The stock closed off its high and the moving averages turned.
If you are not out of a pattern like this, an exit stop should be placed.
I would exit longs in AMAT at 82 15/16.
If the stock continues to rise, let your profits run and move up your stop.
An aggressive trader may want to consider a short there with a 2 point stop.
Chart courtesy of
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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.
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1998-2000 Tulips and Bears LLC.
All Rights Reserved. Republication of this material,
including posting to message boards or news groups,
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is strictly prohibited.
Last modified: February 02, 2001
Published By Tulips and Bears
LLC
