I dont like knives

Discussion in 'Technical Analysis' started by cashmoney69, Oct 26, 2006.

  1. When a stock gaps down on negative earnings like RNVS did today at a 10.77 gap loss, would this be a good time to buy?

    How do you know when a stock is cheap and ready to buy, or to avoid all together?

    I dont want to catch a falling knife, but I see a similar pattern in CAT http://stockcharts.com/h-sc/ui?s=CAT&p=D&b=5&g=0&id=p27855118144


  2. This stock didn't gap down because of earnings ... it gapped down because it's only drug in the pipeline failed. It had all of its eggs in one basket. Apparently the cash value at the current moment is around 3.65-3.70, but they're losing money, so I'm not sure how much that means.


  3. i think costaverageman buys this stuff after huge beatings. as for me i rather speculate intraday, i have no clue how rnvs could beahve long term.
    maybe wait a couple of weeks when all the shorts are flushed out and then buy a tiny pos...if stock goes up...add more.
  4. dac8555


    i do this on occasion...but only with good reason...not blindly.

    here is how i do it.

    1. I already have a watch list of 100 stocks (IDB 100)..positive EPS growth, positiove earnings, volume etc...no junk companies.

    2. i break that list down further into stocks with over 200k shares traded on average per day.

    3. From there i start the technicals.

    4. If something drops hard (look at PRXL)..it needs to have an overall uptrend before that happens.

    5. i will use WILL %R to find a profitable ocsillator setting (on bloomberg i can manipulate the sttings)

    6. Look for areas of support and resistence. the bounce point idealliady would beright on support.

    7. LET IT BOUNCE FIRST. dont catch it while it is still falling. I use WILL R to give me the indicator.

    8. Also look for "exhaustion volume"..super hight volume as everyone panicks..this is a great sign.

    I made $$ off CAT, but after it rose about support..so just a couple fo points.

    I am looking for an entry on PRXL...i think i may get it friday. I think this will be a good example...follow it and tell me what you think.
  5. dac8555


    After looking at your chart...i would not touch that...no earnings, no real volume, price too low. no reason why it would get a good bounce. i dont touch anything under $10. Also...you MUST have liquidity...volume is key here.

    and something i forgot to add above.. VERY TIGHT STOP LOSS!!!!

    If it aint going up...dont buy it. you want that bugger to bounce straight up and never look back. If you have to screw around, watch concoludation blah, blah...you are in at the wrong time. On these i do concentrated positions, intraday...and cut back the position for a hold of a few more days.

    good luck
  6. [​IMG]
  7. Short entry?...i think support is at 28.25 - 28.00

    60 min chart shows a break down gap, which will probably be followed up with a continuation gap to the downside as well.

  8. VictorS


    I LOVE FALLING KNIVES!!!! but not this one. markets tend to overshoot and overreact. but this is something real. personally, I had looked at it earlier and passed on it as a trade.
  9. Tums


    listen to your heart.

    don't rationalize your way out of good sense.
  10. VictorS


    Let me add this...I am not telling you not to make the trade. I, personally, wouldnt trade it.
    the reason I say this is b/c a couple of weeks ago someone posted sort of the same thing on ET.
    I told him I wouldnt trade it. I added that if forced to trade I would only trade it untill it reached $69 then leave the trade. Well, the stock runs to $69.38 and looks like it wanted more. I felt like I had cost the guy money. I think the stock ended up reversing after $69.38 and hasnt traded higher so I felt a lot better.
    #10     Oct 26, 2006