[candlestick1]

the semiconductors had a strong reversal day on Thursday, a lot of gap upsd from inverted hammers and doji's. The individual stock charts also had the same chart pattern as the semicnductor indexes, which means that buying in that sector came in across the board.

The REIT"S had some severe sell signals today.

Would be being semiconductors with some shorts in the REIT's area.

[Ron]

I was getting ready to short semis. But now that you say it's a reversal, would it be better to wait for a pullback before going long?

[candlestick1]

Being that the semis are in the over sold area, and the buy signals are occurring, would be adding longs, using the recent lows as the stop area. Remember, the probabilities say that if you see acandlestick buy signal in an oversold condition, you have a high probability of making money. A pullback is possible, but you should not be trying to get in at the very bottom, you want to be buying in the area of high probability moves to the upside

[Ron]

Thanks. I bought NSM and AMD Friday. They both reflect SOX which had a Morning Star and a long white candle on Thu. with high volume on the individual stocks and oversold stochastics turning up. I have 2 questions:
1. If this was a shortable bounce rather than a real reversal, how would the signals/indicators differ? i.e, how do you tell the difference?
2. When do I sell? Your book says sell if I see a doji and overbought stochastics. Should I tighten my stops and let the market take me out or do I liquidate the trade as soon as I see a doji or shooting star or other bearish signal?

[candlestick1]

Watch the stochastics, the signals are more important when the occur in the overbought or oversold conditions. As of now, Would let these positions run until there is clear evidence that the sellers were taking control. AMD has gone up through the 50 day MA , now watch for the 200 as a potential resistance. See what the signals do at that level. NSM almost touched the 50 day today and pulled back but the stochastics still in strong uptrend, give it a few days.

[Ron]

SOX looks quite bearish. Yesterday was a hanging man doji, today's close is lower than Monday's open. But stochastics looks like its got a little more juice. Are we still long on semis or should we be looking to short?

[candlestick1]

Yes the SOX index has turned down with a sell signal, would be taking quick profits on a weak open tomorrow and have many of those stocks now showing good short signals