3SOF

Adaptec, Inc.(ADPT). The Group's principal activities are to design, manufacture and market storage access solutions that move, manage and protect critical data and digital content.

The long term chart looks like this:



We have that pattern that I love. Bag holders sold when it broke the 2002 low so the stock is now clean to advance.



I'm buying this at the open but today I'll be more concerned about selling. I'm going to sell some of my holdings.

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Have a nice day !

Interesting Pick,,What would be your timeframe of holding your postion?This is really an excellent site and I look foward to visiting it every day,,sincerely

... on ADPT. My holding timeframe normally goes from 1 to a maximum of 15 days, but I try not to hold stocks more than 5 business days. I do this because I believe a good trade is profitable right from the start and I want to search and buy 3 new stocks everyday (since I have a limit of 15 different holdings I have to keep selling stocks to buy new ones ... I don't get in love with stock stories or fundamentals.

Concerning ADPT maybe, and learning a bit with aussietrader, maybe I'll sell at the 50 day simple moving average, in red at the chart below.

Thanks for your complement on 3 Stocks on Fire !

Answering to a post yesterday I said I would probably sell ADPT if it touched it's 50 day sma. It did, at $4.07, but I wasn't looking - so I sold now, a bit away from that level.

About 8% profit in two days. The stock needed a rebound, I needed a profit. Nice marriage. Now the rebound has already happen, I don't know what will happen next and I'm no curious to it.

Nice trade Randolph
And this is a peculiar difficult stock to trade.

thanks 

... maybe I sold too soon, but from the chart below I still conclude this is a rebound in a downtrend and ADPT needs a more solid base to truly invert the bearish trend.

ADPT is a volume story. Price down and volume up is a bullish divergence. I believe it is appropriate to say, as in the past, that ADPT is in need of a rebound.

ADPT is the buy back stock #3 for today.

After the close I'll make a more profound update, but now I haven't time for more. Basically 3 stocks that I've sold but maintained on watch list have reached support and are ready to be bought again.

(This recommendation was made by David Randolph from 3 Stocks on Fire. 3 Stocks on Fire is a Community of stock traders and investors. Our 2851 members change trading ideas and strategies on our message boards everyday. We welcome you as a new member of the 3 Stocks on Fire Community, please take 10 seconds to register and receive our free newsletter)

Price down and volume could also mean that a lot of traders were anxious to sell the stock and drove the price down, couldn't it?

Rephrase the question a little:
Price down and volume UP could also mean that a lot of traders were anxious to sell the stock and drove the price down, couldn't it?

Quote from: cmshop on August 18, 2005, 01:13:54 PM
Rephrase the question a little:
Price down and volume UP could also mean that a lot of traders were anxious to sell the stock and drove the price down, couldn't it?

Good question cmshop 

They did drive the price down, but that selling was met by buying interest, that's why we get so much volume. It could be bargain hunting, bottom fishing, value investors, whatever, what's true is that heavy selling was met by heavy buying and that's a bullish factor: the lower prices attracted new buyers into the stock.

A bearish stock falls because of lack of interest, that's why it continues falling until the price is so cheap that it becomes interesting. Then buyers come in and you get volume. ADPT is on this phase now, I believe.

This is going to be a fast trade, I'll sell at the first resistance, $3.7, for a quick 11% profit. Not considering the downside at this moment, big volume shows strong support just beneath current levels.

QuoteThis is going to be a fast trade, I'll sell at the first resistance, $3.7, for a quick 11% profit. Not considering the downside at this moment, big volume shows strong support just beneath current levels.

There's no motive to change anything to the previous analysis or trading plan. I'll try to sell at the $3.7 resistance level for a 11% short term profit. If this scenario plays out then I will evaluate the stock again and possibly come back in with another trading plan.

Now I have a target to sell and a stop level for this trade on ADPT:

1) Sell at $3.70 for a 11% profit.
2) Sell if the stock closes again below $3.35 for a small profit or small loss.

David, does "Price down and volume UP" always mean positive divergency? If not always hold true, then based on your experience under what circumstance it would be positve divergency , and under what circumstance it would be NOT? 
Can you share your experience on this?

Quote from: cmshop on August 23, 2005, 08:20:54 PM
David, does "Price down and volume UP" always mean positive divergency? If not always hold true, then based on your experience under what circumstance it would be positive divergency , and under what circumstance it would be NOT? 
Can you share your experience on this?

Good question cmshop, I really like volume analysis. In fact I have some scripts about it that I should share, some 12 situations when volume is a valuable indicator for future prices. Perhaps on the weekend I'll post something about it on the «Knowledge Center»

Considering your questions, let's go by parts:

1) «David, does "Price down and volume UP" always mean positive divergency?»

No, not always.

2) «If not always hold true, then based on your experience under what circumstance it would be positive divergency , and under what circumstance it would be NOT?»

It's generally considered a positive divergence, but there is one exception and some pre-conditions must be met. The exception is after a big bullish trend, the stock trades sideways for a while and then it breaks an ascending trendline or somekind of support with strong volume. That's very bearish. If prices are near the top and start going down with volume above average probably the trend is really shifting, from bullish to bearish.

The pre-condition is that volume analysis must be made in connection with other technical analysis. That is, you shouldn't buy a falling knife, period. Regardless of volume analysis. You need to have an accumulation phase, with the stock trading sideways, before buying ... at least a white candle is needed.

I'm sure you've seen many stocks going down in freefall with strong volume, that's because everyone wants to sell fast before the stocks gets delisted or something.

So, price down and volume up is generally a bullish divergence, but one needs to check if other factors agree, like a support was reached, there was an accumulation phase, the stock isn't coming down from a top, etc.

Now, taking ADPT as an example (it is a perfect one), the stock isn't near a top, in fact it's near all time lows. It's not on a free fall, check the accumulation phase on the chart. Volume was above average on the accumulation phase, after a down trend.

Yesterday the stock came down on very low volume, I don't take any indication out of this small range day. I'll stick to the plan, which is:

Quote1) Sell at $3.70 for a 11% profit.
2) Sell if the stock closes again below $3.35 for a small profit or small loss.

ADPT had it's rebound, but it wasn't enough for me to get out with a profit. Anyway, the stock closed below my stop level, which was $3.35, so there's no doubt I need to sell ADPT right away, at the opening of the market (usually I don't act on the pre-market, because spreads are much bigger and slippage costs are higher over the long run).