3SOF

But we seem to have gotten the bounce off our ubiquitous support level, which was what we were looking for all along - now posting 6.02.

I think we should se DNDN gain a bit more ground here, but it will be a struggle for it to break the 6.30s in coming days.

All I can say as that it is damn good that it didn't break down from support like so many others have recently.  At least that bodes well

Quote from: ScottishTrader on October 13, 2005, 02:22:56 PM
But we seem to have gotten the bounce off our ubiquitous support level, which was what we were looking for all along 

I guess it was, wasn't it?!       

That's okay that we broke the trendline early to go down there and test the 5.88, as long we hold now above that trendline.

QuoteI think we should se DNDN gain a bit more ground here, but it will be a struggle for it to break the 6.30s in coming days.

Yeah, and the 6.40s.  At least we've got a better base from which to attack that resistance.  The rally from last Friday's "V-bottom" low of 5.94 was straight up and got smacked at 6.40 - 6.44, the bottom of mid-September resistance, which often happens to those "V-bottoms." 

QuoteAll I can say as that it is damn good that it didn't break down from support like so many others have recently.

That's for sure.

Quote  At least that bodes well

Let's hope so!   

I'd love to see a close at 6.12 or above.  That was yesterday's high, and would give us a Bullish Engulfing Pattern.

Not likely, though.  DNDN currently is BID 6.03...ASK 6.04

EDIT:  Hold all tickets.  DNDN now is BID..6.10...ASK 6.11   

Quote from: Melf Elf on October 13, 2005, 03:47:11 PM
EDIT: Hold all tickets. DNDN now is BID..6.10...ASK 6.11

Darn! 

We got 4,300 shares at 6.13 at 3:59:57, but then several trades of a few hundred shares at 6.11.   Close was 6.11.

That's fine.  At least we're above the trendline, and we ain't out of the woods anyway, Yogi Bear. 

 

True,

but having cut a few losses (notably EGHT) and picked up VPHM, which filled a gap and got a good bounce off suppport, and also a phenomenal day for AAPL, recouping more than it lost post-earnings,  my portfolio is starting to look up againn 

I'm almost back to where I was 2 weeks ago!!

I think today's bounce back has confirmed the 5.88 level as support, and that, regardless of the break of trendlines, will be my close out level for now.  We may get another pullback as we did from the nice marubozu the other day, but here's hoping that this more conservative gain can hold, and we will get a more steady rise back towards $7.

There is still that biotech conference on the horizon at the end of the month, and it sounds like they may have some results to present there - lets hope its positive!!

a slightly happier Scotsman 

Quote from: ScottishTrader on October 13, 2005, 04:18:15 PM

I think today's bounce back has confirmed the 5.88 level as support, and that, regardless of the break of trendlines, will be my close out level for now. 

Scotsman,

You're gonna love this: remember when we made the low at 5.88 around 10:00AM on Thursday morning, then rallied to 6.10, then came all the back to the low around 1:00PM?

I was wondering what the heck it was doing, going back down to re-test 5.88.  We already did that! 

It wasn't until the end of the day that I noticed that the 1:00PM low was 5.89!


http://ts-lc.sc8.finance.lycos.com/1123874431937?User=demo&Pswd=demo&DataType=GIF&Symbol=NASDAQ:DNDN&Interval=10&Permission=1000&Ht=400&Wd=600&Display=2&Study=&Param1=&Param2=&Param3=&FontSize=10&LocaleID=0x0409

I thought that was pretty cool, since we talked so much about 5.88 - 5.89 being the highs of the September Ascending Triangle.  On Thursday, DNDN violated the up trendline to go down and validate BOTH of those prices as support.

QuoteWe may get another pullback as we did from the nice marubozu the other day,

Right you were!

We sold off a little on Friday to 6.05 (the bullish doji star on the 10-minute chart above).  Why a selloff to 6.05 when we should be getting going to the upside, darn it?

When I downloaded the data tonight, I noticed that the early morning dip to the 6.05 low was to re-validate the up trendline that was broken to validate 5.88 - 5.89 support.

Cool, huh?! 

6.05 also is important because that's where Basonista got in.  He brought us good luck!

Quote from: Melf Elf on October 13, 2005, 04:07:10 PM
That's fine.  At least we're above the trendline, and we ain't out of the woods anyway, Yogi Bear.     

The MACD technical indicator is one of the reasons that I made that statement.  I've enumerated my points on the MACD chart below, so you can follow along, if you're interested in the TA side of things.  This is pretty tedious and boring, otherwise.

1. After DNDN "apparently" broke down on August 8 (it broke below its up trendline on the log chart), it consolidated and formed a small Ascending Triangle.  The top was 5.88 - 5.89.

While the Ascending Triangle was forming, look what MACD was doing (first set of vertical blue lines).  It stopped going down, flattened out, then crossed above its signal line (dotted red line).

Some automatically will say that "MACD just gave a Buy Signal."  Be careful with that.  Yes, it gave a bullish crossover, but it occurred below zero.  Those "Buy Signals" often fail, especially if the stock is in a downtrend, or if the stock is "suspect."

DNDN was "suspect."  It had broken an up trendline, and the jury was still out.  It's fine if you want to take that MACD crossover as a buy with a stop below last support, but I wouldn't take it as a Buy Signal if a stock were in a clear downtrend, making lower lows, with no pattern, etc.

You can get clobbered taking those signals in a downtrend.

What you want when you get MACD "Buy Signals" is some idea from the chart that it's holding support, or preferably, a pattern breakout.

MACD crossed above the zero line on September 1.  Many technicians use that as a Buy Signal.  What was the stock doing?   DNDN printed 5.90 that day, above the 5.88-5.89 highs of the Ascending Triangle. That was a "Buy Signal" when you've MACD crossing above the zero line, accompanied by a pattern breakout on the chart.

I wasn't watching DNDN at that point, dang it.   

2. MACD double topped on September 20, five days after DNDN made a new high at 7.37.  MACD was going higher on momentum, but DNDN didn't go any higher.

September 23, MACD crossed below its signal line.  Some will say "MACD gave a Sell Signal."  Be careful with that.  It wasn't a Sell Signal.  DNDN made a LOW on September 23 at 6.40, then it rallied almost 10%, back to 7.00.

Sometimes those do turn out to be outright Sell Signals, but you've really got to view them in context with the chart and other indicators that you like.   

3.  What often is a good Sell Signal, is when the MACD tries to rally back to the declining signal line, then fails at the signal line (or fails slightly above or below it), like it did  when DNDN rallied to 7.00 on October 4.

When the MACD gets near that declining signal line, watch for the low of that trading day to get taken out.  The low on October 4 was 6.79.  When 6.78 gets printed (known as a "Sell Pivot"), that's often a good sign that the stock is in trouble.  Not always.  These signals have to be used in context with what's going on in the chart.

In the chart, October 4 was an Inverted Hangman, so there was a clue.  October 5 was a long black candle (after it took out 6.79), as MACD ticked down (failure) at the signal line.  Another good clue.

Looking at that MACD failure, we can see why it seemed like "they pulled the plug" when DNDN sank from 7.00 to 5.94 that week.

4. Look where the MACD is now.  It's flattened out, but the signal line still is way up there, and declining sharply.  It looks like we're going to need some time (second set of vertical blue lines) for the MACD to consolidate before it can "get in gear," like it did in late August (first set of vertical blue lines) before the September 1 breakout.

If DNDN takes off to the upside right now, picture what the MACD is going to do.  It's going to go running up to the declining signal line, and try to bang its way right through it.  It "could" do that, especially on some fabulous news, but it otherwise would likely get smacked at/near the declining signal line. 

With the MACD so badly positioned here, what I'd like to see is a "steady as she goes" move higher to get out of harm's way of the up trendlines, with some consolidation to give the MACD a chance to get properly postioned.  It's boring, I know, but it doesn't look "ready to rock," like it did at the September 1 breakout of the Ascending Triangle.

It's interesting that an upward consolidation period here would have us ready, technically, for any good new out of the October 30 conference in Paris.

I hope that this wasn't too boring.  We need a face on the toolbar that YAWNS.

Quote from: Melf Elf on October 15, 2005, 01:52:38 AM


6.05 also is important because that's where Basonista got in.  He brought us good luck!

Usually I'm bad luck!   Maybe this will mark a bounce off my trendline!

Melf Elf,

Thanks very much for the last two posts - as ever, not boring at all, just detailed explanation, and I can follow your thinking well on this one.  In particular, your analysis of the MACD indicator is very useful to me - I have been learning about using indicators like MACD and RSI to guage thee readiness of a stock to make a move, but such a detailed analysis really helps a lot 

It also shows exactly how you need to take these indicators in context of other aspects of the chart pattern to get an idea of why things historically may have happened, but also to look to the future, which is what we all want to do, right? 

Believe me, I have learned so much from your analysis and explanations, and regularly keep an eye out for all your posts now to see what else I can learn, even when I am not invested in these positions.  In a funny way, I think thesse ones you can be even more objective about because yoou don't *want* it to do something.

But there you go, looks llike DNDN is in a "sit tight for now" phase - but perhaps we should keep an eye out for signs that it might retrace again to test support - a second failed MACD crossover might show this - but lets hope we'll see a gradual consolidation next week 

I'm quite happy this weekend with where things ended up as of friday - despite missing out on the opportunity to make some serious cash on HYRF's swing, I'm now in a position where all my trades are in positive territory - some only just, but makes a great change from seeing all red, as the last few weeks.  The market may be getting tougher, but lets not forget that there are still companies with great stories set to do great things, and if yoou can find em and ride em, theere is always money to be made

Have a nice one Melf Elf, and Basonista, glad you joined the party 

Quote from: basonista on October 15, 2005, 07:56:17 AM
 Maybe this will mark a bounce off my trendline!

Which forevermore shall be known as "The Basonista Trendline." 

Now, that sounds like a trendline that I never would want to cross.  We we a face on the toolbar with its hair standing on end...BE VERY AFRAID.

QuoteIn particular, your analysis of the MACD indicator is very useful to me - I have been learning about using indicators like MACD and RSI to guage thee readiness of a stock to make a move,

Scotsman,

I'll post a note to you in the AAPL folder re: its MACD. 

Quote from: Melf Elf on October 16, 2005, 02:07:22 PM

Quote from: basonista on October 15, 2005, 07:56:17 AM
 Maybe this will mark a bounce off my trendline!

Which forevermore shall be known as "The Basonista Trendline." 

Now, that sounds like a trendline that I never would want to cross.  We we a face on the toolbar with its hair standing on end...BE VERY AFRAID.

Hehe, it's my wife's trendline that I fear crossing!  When it's one of those days, watch out!

Seriously, your explanation on the application of MACD on both AAPL and DNDN is very interesting.  I'm sure I'm not as far along on educating myself on trading as Scottish but seeing how real life investors do it is invaluable.

What other indicators do you use in combination with the MACD as you do your stock analysis?  Is the calculation of the Kumos that you use something unique to Metastock or are there other programs that will display it?

After reading your posts on MACD, I have looked at some of my holdings to see how they stack up keeping the MACD indicator in mind.  In particular I looked at BRVO, EYII and HYRF.  I suppose a post in each of those threads would be appropriate but I would be very interested and greatly appreciative if you could comment on what I have been able to come up with.

HYRF's action on Friday has me concerned with the Engulfing Bearish candle in combination with the MACD crossover.  I don't think this is a sell signal by itself and know the Engulfing Bearish candle needs confirmation to indicate trend reversal.  What is your read on the MACD crossover with Friday's action?  Would you consider the flattening of the MACD in the last 8 trading days a potential signal that the trend may be over or would you think it is more an indication that consolidation is taking place?

In hindsight, BRVO would have been a sell after it printed the high of $1.42 in mid-July if you went strictly by the candlestick patterns in conjuction with the MACD crossover.  Or would it?  BRVO has been bearish ever since that high so what would you look for to determine a good sell point there?  Would you consider the gradual uptrend in the MACD (contrary to the downtrend in the chart) as an encouraging sign of bullishness to come?

Something as volatile and fast moving as EYII seems more difficult to use standard indicators to determine buy and sell points.  How would you read the MACD on a chart like that?

I have applauded you many times, Melf Elf and will do so many more times I'm sure!  You are certainly one of the great assets to this board!  I look forward to reading and learning from your posts for some time to come!

Quote from: basonista on October 16, 2005, 09:05:24 PM
What other indicators do you use in combination with the MACD as you do your stock analysis?

The Ichimoku Kinko Hyo, some Fibonacci-related measures of relative strength, Fibonacci retracement levels, volume... that's really about it.  Every technical analyst is different.  Some use tons of indicators, and that works for them.  For me, the simpler the better.

I rely much more on chart patterns, trendlines, and support and resistance levels, much of what we've been doing here with our analysis of DNDN.  One of the reasons that I don't use alot of indicators is that if, for example, DNDN had taken out 5.88-5.89 support, I would have sold it, regardless of what any indicator looked like. 

QuoteIs the calculation of the Kumos that you use something unique to Metastock or are there other programs that will display it?

Sorry, I don't know.  I'm not familiar with any other programs.  Metastock does all of the calculating for you, though. 

QuoteAfter reading your posts on MACD, I have looked at some of my holdings to see how they stack up keeping the MACD indicator in mind.  In particular I looked at BRVO, EYII and HYRF.  I suppose a post in each of those threads would be appropriate but I would be very interested and greatly appreciative if you could comment on what I have been able to come up with.

The only one of those with which I am familiar is BRVO, and since I get pressed for time looking at all of the various stocks that I'm following, I'll limit my comments to that one.  (Also, I don't play penny stocks).

QuoteIn hindsight, BRVO would have been a sell after it printed the high of $1.42 in mid-July if you went strictly by the candlestick patterns in conjuction with the MACD crossover. Or would it?

I thought it was a sell.  There were two bearish engulfing patterns on June 28 and July 14, and those two occurred on the heaviest volume days for the move.  In addition, there was an Bearish Evening Star Pattern that was put in on August 3 when the stock closed at 1.15.  MACD ticked back below its signal line the following day.  The stock also was trading in a Bearish Channel. 

That's a good example of looking at a combination of things to determine whether or not you want to be long a stock (or short).

QuoteBRVO has been bearish ever since that high so what would you look for to determine a good sell point there?

That has to be determined by each individual because, as you say, BRVO is in a bearish trend and  good sell points already have passed.   

QuoteWould you consider the gradual uptrend in the MACD (contrary to the downtrend in the chart) as an encouraging sign of bullishness to come?

That can be a deadly combination for the very reason that you suggest: it looks VERY encouraging for technical indicators to keep improving as the stock goes down, but when a stock is in a bear trend, these "positive divergences" can be a red herring (something that distracts from what's really taking place). 

Let me show you.

In the  KKD chart, there are FOUR positive divergences in the MACD (see chart below).  It looks VERY encouraging.  I've listed the stock's price that coincides with each divergence.  The stock continued to go lower...lower..lower.  It's now south of $5.  Ugh!  Those postive divergences were not bullish!

BRVO has had TWO positive divergences in the MACD: September 15 and September 28.  On October 13, however, BRVO broke below a Symmetrical Triangle and went to a new low for the move at $0.47, so it's clear that those positive divergences in the MACD were not buy signals.

On Friday, BRVO moved back up to the broken Symmetrical Triangle on a THIRD postive divergence in the MACD.  "Could" go higher, but until price confirms what MACD is doing, the MACD "buy signals" are bull traps.

I hope that any of that helps, and thank you for the kind words, Basonista.

Thanks for your input, Melf.  One thing I have learned in my short time trading is that it is like most things in life - the more you learn, the less you realize you know.  Thanks alot for helping me along the path of education!

I've come to 3onfire recently and have been doing some backlog research for previous picks.  Saw this DNDN thread and enjoying your intensive TA work (new to stocks myself, but learning alot here). 

I'm thinking about buying DNDN since they will be announcing the trial results in Paris soon.  Since there is a risk that the results might not be good and the stock will plummet, do you guys (Melf Elf, Scott, etc) think that it would be better to purchase an option, maybe a backspread, to limit the downside potential.?  How are you dealing with this possibility? 

Thanks and keep this thread going.  I'm definately reading. 

logocovet,

I bought in at 6.16, which in hindsight was not ideal, but not too bad either.  As the ascending trendline we were working with was broken last week, I'm not paying as much attention to it as I was, but am considering a close below 5.88 as my exit signal.  This was the level that has been tested recently, and as Melf Elf's posts detail, looks like it shows support.  This also gives me a risk of about 5%, which I can handle.

As far as what is coming is concerned, the fact that they've announced they will be presenting results at the conference at the end of the month suggests that it could be good, but really who knows.  The big worry is that with biotechs, and especially one like DNDN which has a heavy short position, bad results or no results could cause it to tank way below my exit level (I haven't/can't set a physical stop).

But at the moment, that's the risk I'm willing to deal with.  As for you, yoou can make your own decisions on this one, but an entry between 6-6.15 would probably give you a reasonable risk/reeward ratio.

Hope that helps 

todays chart....