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MASTERING
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ORIGINAL, INTERACTIVE
SEMINAR ON TRADING USING
TECHNICAL ANALYSIS
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| ARCHIVE:
JUNE
1999-JANUARY 2001 |
|
An
InvestorLinks article
distributed every market day. |
International
Game Technology (NYSE: IGT)
Market Call™ for February 9, 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.
You need to know when the party is over.
A trader takes what the market gives and lets the market tell them when the
trend has changed. When a stock breaks the low of the lowest low in the
last 20 bars, it could signal a major trend change.
Support, Resistance and
Breakouts
Think of security prices as a war. It is a battle between a bull (the
buyer) and a bear (the seller). The bulls push prices higher and the bears
push prices lower. A buyer that feels an area has good value, will buy at
that level. The seller that feels that a stock has reached fair value, will
sell at that higher fair value price. The direction prices actually move
reveals who has won the battle.
Remember when a trade takes place, a buyer and seller agreed to a price.
There was a buyer and a seller involved in the transaction. The buyer feels
the stock will go up. The seller wants to move on to another stock that he
may feel will appreciate faster.
Support levels are the price where the majority of traders feel the value is
a good buy.
Resistance is the level in which the majority of traders feel prices will
move lower.
When the majority of traders and investors change their expectations, these
support and resistance areas get violated and a new trend may be beginning.
This can occur due to changes in expectation of earnings, new product
development, change of personnel, cut backs or expansions.
One interesting pattern that traders see after a breakout, is that the stock
or index retraces a part of the initial move by about 50%. If the 50%
retracement does not hold, the stock or index can still be in a trend if the
previous breakout resistance holds.
International Game Technology,
IGT.
Lets look at an example of a potential breakdown in International Game
Technology, IGT.
After another upward thrust, IGT moved sharply up from 44 to 52.
During the past 3 days, IGT has struggled at this level of 51 to 52.
Today, February 8, 2001, IGT broke a support level of 51 and closed at
50.20.
Support has been broken. I would exit longs at this time.
An aggressive trader may want to Short IGT here.
Perhaps this is support in the stock and the stock will move higher.
However, as it stands now, there are many new buyers who I believe will exit
their position in IGT as it breaks this support.
I do not like tests of support. Usually stocks breaking multiple tests of
support do very poorly once that support is broken.
If a short is entered, place a close stop at 51 �.
There many stocks that looks like this IGT chart. Be aware of support and
resistance levels in your stocks.
For tick by tick charting and quotes for trading,
use Trend
Trader TORS Software.
|
Chart courtesy of
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 |
Interested in adding Market Call to
your website?
Click here for details: Market
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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