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EDMC
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Owl
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PostPosted: Wed Mar 16, 2005 1:25 am    Post subject: EDMC Reply with quote

Here's a morning star that may confirm wednesday.

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tab321



Joined: 22 Jan 2005
Posts: 368
Location: Texas

PostPosted: Wed Mar 16, 2005 2:40 am    Post subject: EDMC - Morning Star Reply with quote

Owl

This is a good looking Morning Star. It seems you lean toward the idea that a Morning Star must be confirmed. That has become a tedious subject here lately. Nobody seems to know the answer!!

In the Book....P. 53...Bigalow says that the third day of the morning star is CONFIRMATION that the trend has reversed. There is no mention that a Morning Star must be confirmed the next day as would be the case of an Inverted Hammer.

If you go by the book, a Morning Star does not need confirmation. If you go by what has been posted on this forum.....AUO did need confirmation but MDKI did not need confirmation. I am still trying to figure out why. No doubt, the call that was made was good because AUO went down and MDKI went up.

The stock chart you posted is a perfect morning star. Why would you need to wait until the next day to buy it? Why would you prefer confirmation? And, how much confirmation would you require....higher close?.....close not more than halfway down the last candle of the Morning Star?......???

Obivously, this is a touchy subject. Hseing asked one question: Does a Morning Star Signal need confirmation? There have been a bunch of responses but no one has ever answered YES or NO.

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Owl
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PostPosted: Wed Mar 16, 2005 3:18 am    Post subject: confirmation Reply with quote

TAB ... I consider confirmation the candlestick that occurs just after the signal. For a morning star the first 3 sticks would be the morning star and the 4th stick would be the confirmation. That said, I prefer to get in on the last stick of the signal before the confirmation stick as there is more profit that way (and more risk). Unfortunately I didn't find this one until scanning after market so I will look for a confirmation stick now. I look at the confirmation stick as a work in progress so for me its more a matter of confirming the direction its going after opening.
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tab321



Joined: 22 Jan 2005
Posts: 368
Location: Texas

PostPosted: Wed Mar 16, 2005 3:56 am    Post subject: That is Right Reply with quote

Owl

Thanks for your reply on that. What you say makes sense and I agree with you 100%. A Morning Star Signal is "complete" without confirmation although entry on that completion could always be more risky. To see it confirmed....may offer some comfort and it may offer a better success ratio. To prove that....there would have to be a study of the Morning Stars taken at completion verses Morning Stars that get confirmed the next day.

And - I agree that if you miss the signal because you do not catch it until after the market is closed........then....you might as well wait for confirmation. Nothing wrong with that.

HOWEVER - do not think (and I am sure you don't) that a "So-Called Confirmation" means that the signal was any good to begin with. Confirmed Morning Stars fail as do Morning Stars. I went back through my notes and the very first morning star I came upon was one that failed even though it was confirmed the next day. I will put that on another thread.

Anyway - you picked a good morning star. I am anxious to see how it works out. Where have you been? We have missed you. You got us all pumped up about the RSI and then left us!
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Owl
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PostPosted: Wed Mar 16, 2005 4:19 am    Post subject: confirmation Reply with quote

TAB ... About the confirmation as a work in progress. I see the confirmation as more of a check of the direction of the short term trend after the candlestick signal. After a good day like EDMC had on tuesday it would not surprise me if the stock gapped down on wednesday's open. If the gap down is less then 1/2 way down the white candle body and resumes the upward movement after the O.R. (Opening Range) then I will still consider getting in. However, if it gaps down more then 1/2 way I'll look for a better candidate to trade. Also if the short term trend is not up then this is not confirming the signal. I consider the short term trend to be confirmed if the price is making a H.O.D. (high of day) after the O.R. Obviously, it would be best if it gaps up and moves up. This is my way of playing the confirmation and may not be right for another trader.
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tab321



Joined: 22 Jan 2005
Posts: 368
Location: Texas

PostPosted: Wed Mar 16, 2005 4:25 am    Post subject: Confirmation Reply with quote

Owl

Again - that makes sense. I can sure understand the "work in progress" part. Here is a question - for you:

When you see strong buying at a nice bottom like EDMC, how do you know if it is nothing but Short Covering?

If it is purely short covering, and the real buyers are not ready to buy.....then you could have a Signal that takes you sideways for a while.

In other words, just because the Bears are finished or tired.....that does not mean the Bulls are ready to buy. That may explain why many morning stars do fail.
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Owl
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PostPosted: Wed Mar 16, 2005 4:39 am    Post subject: Stops Reply with quote

TAB ... It could be short covering as you say and then its a fizzle or even worse it goes down but that is what a trading plan and stops are for. Even a good signal fails. Cut your lossers and let your winners run.
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Owl
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PostPosted: Wed Mar 16, 2005 11:16 am    Post subject: bot Reply with quote

TAB ... I bot a small position of EDMC at 29.31, I bot small for two reasons: 1) this is a low ADV stock and I always buy less of illiquid stocks 2) the mkt looks weak now. However the short term trend looks to be OK.
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Owl
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PostPosted: Wed Mar 16, 2005 11:28 am    Post subject: stop Reply with quote

TAB ... I set my stop (alert/mental) to sell below 28.96 and I would like to see a swing trade develope.
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Owl
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PostPosted: Wed Mar 16, 2005 12:31 pm    Post subject: following stop Reply with quote

TAB ... I am moving my following stop to 29.18 now and am making it a hard stop (a stop listed with my broker) as I am going to lunch. This stop puts me close to my buy in price and will help my digestion. Smile
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tab321



Joined: 22 Jan 2005
Posts: 368
Location: Texas

PostPosted: Wed Mar 16, 2005 2:05 pm    Post subject: The Stops and The Trade Reply with quote

Owl

It looks to me like you are doing a nice job with this trade. For sure, the stock is holding up and/or moving up in a weak market. Thanks for keeping us posted!

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SteveB



Joined: 12 Jan 2005
Posts: 82
Location: Cocoa, Florida

PostPosted: Wed Mar 16, 2005 9:54 pm    Post subject: EDMC Reply with quote

Owl,

Thanks for posting this! I saw your original message this morning before the open and jumped in as well once it looked like it was going to stay up. Hopefully tomorrow will be a better market day and we'll see more upside.

Steve
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Owl
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PostPosted: Thu Mar 17, 2005 11:04 am    Post subject: stop Reply with quote

Moving the following stop up to 29.37

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Owl
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PostPosted: Fri Mar 18, 2005 10:14 am    Post subject: stop Reply with quote

Moving following stop to 29.60

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PostPosted: Fri Mar 18, 2005 10:16 am    Post subject: Re: EDMC - Morning Star Reply with quote

Quote:
Obivously, this is a touchy subject. Hseing asked one question: Does a Morning Star Signal need confirmation? There have been a bunch of responses but no one has ever answered YES or NO.

How about scaling in your position? Those of you who want to buy on the third candle -- put on half a position. Then, the next day, with the position moving in your favor, put on the other half. It cuts your losses in half without cutting your profits in half. OR, if the market is in a strong uptrend and candle signals are very reliable, and/or the close is above the first day's close, put on the whole position. Money management 101.
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