V.9:12 (499-504): SIDEBAR: BUYS AND SELLS

V.9:12 (499-504): SIDEBAR: BUYS AND SELLS
Item# \V09\C12\SIDEBB.PDF
Availability: In Stock

Product Description


In Figure 3a, the greatest buying opportunity occurs when price action becomes strong at a time that many are doubters. Depicted are indicators of both price strength and investor sentiment. Relative and absolute strength are indicators of price. When Merrill's relative strength line is rising, its stock price is outperforming the market. When Merrill's absolute strength line is rising, then Merrill's stock is behaving better than it typically does, given Merrill's beta and the current market action. (Beta measures a stock's sensitivity to the direction of the market.) Points P1 to P2 show price advancing to a peak in mid-1989. While relative strength was flat, absolute strength was declining, suggesting that the stock was responding to the market's advance in a weaker-than-normal way. After the peak in price, profitable short selling occurred whenever the shorts make money, the technical underpinnings for a stock are considered weak. Toward the end of 1990, as price and relative strength sank to new lows at points P3 to P4 and R3 to R4, absolute strength turned up (points A3 to A4). The shaded area begins at a time where clearly price is strong, as both relative and absolute strength are trending upward. Doubters added fuel for the advance, as the short interest ratio was relatively high. All the ingredients for a buying opportunity were in place.

*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.

Take Control of Your Trading.
Professional Traders' Starter Kit
All these items shown below only $299.99!
  • 5-year subscription to Technical Analysis of STOCKS & COMMODITIES, The Traders' magazine. (Shipping outside the US is extra. Washington state addresses require sales tax based on your locale.)
  • 5 year access to S&C Archive
  • 5 year access to S&C Digital Edition
  • 5-year subscription to Traders.com Advantage.
  • 5-year subscription to Working Money.
  • Free book selection.
  • Click Here to Order