Veritas
Software (NASDAQ: VRTS)
Market Call™ for December 5, 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.
Focus on exit.
Is it too late to exit a stock?
If a trader trades a signal, can it reverse the next day or next hour?
As a Day Trader, I have seen attempted rally after attempted rally fail
minutes or hours later.
A trend usually remains in place until the evidence clearly shows a
reversal. We use moving averages, look for support and identify patterns to
help us anticipate the future.
We must be prepared for the reversal and exit of losing trades and the
possible reversing of positions.
Moving Average Crossovers
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. When the shorter-term average crosses below the
longer-term average from above, this is a sell signal.
Moving averages are used to smooth prices, dampening the distractions of
short price movement so that the underlying trend is clearer. Moving
averages always lag the market and, therefore, will never buy market bottoms
or sell market tops. Like any other trend-following system, the moving
average crossover will perform best when markets are trending because it
automatically places the trader on the right side of every extended move.
When markets are moving sideways, however, the lack of extended moves will
cause losses.
Let’s look at Veritas Software
Corporation (NASDAQ: VRTS).
We are using 60-minute bars that will help a trader get in faster than using
daily bars. It also allows managing risk better since the stops can be
closer.
The Moving averages that you are looking at are 5 and 20 period exponential
moving averages on 60-minute bars.
Here is another example of a stock that has had many failed Buy signals and
now another Sell signal.
On Thursday, VRTS flashed a Buy signal, and now after a short rally the
stock has reversed.
I would exit any longs in VRTS.
An aggressive trader may want to short VRTS here at 100.
I would place my stop at 104 �.
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.
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: December 05, 2000
Published By Tulips and Bears
LLC
