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Recent action still hints of a "traders market"

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Green, then red, then green again. All fractional moves, but some stocks that had nice gains in recent days have been removed. This type of activity should be telling subscribers that it's still a "traders market". When you've got a profit, you're either snugging up stops or taking chips off the table. Here's a look at some recent stocks I've profiled and what has taken place in just the past couple of days.

Informix Corporation Chart - 60-minute interval.

Just before yesterday Fed rate cut, shares of Informix (NASDAQ:IFMX) were up more than 14% from our bullish entry price of $7. Traders that took the door when the NASDAQ started showing weakness after yesterday's Fed announcement might be back for seconds at current levels, still targeting 8.75. Before you do though, take a look at a supply/demand chart and understand why you should have a firm stop at $6.75.

Informix Supply/Demand Chart - .25 and .50 box scale.

Some traders may be starting to catch on to what type of role a supply/demand chart can play in their trading plans. Once again a bearish price objective calculated way back in May of 2000 indicated a potential downside of $3 for shares of IFMX. The stock reached a low of $2.63 on November 29, 2000. Now we have calculated a bullish price objective that is still underway until we get a "3-box reversal" or a pullback on the above chart to $6.50. The bullish price objective has to be performed twice. Once for the $0.25 scale and another time for the $0.50 scale. The equation would look like this. ((9x3)x.25)=$6.75 and ((6x3)x.50)=$9. Then we take the sum, $15.75 and add it onto the base of $3. Thus our current long-term bullish price objective of $18.75. On the above chart, a pullback to $4.00 wouldn't be out of the question; thus I like a traders stop just below $7. This stock looks very bullish long-term and should provide some good trading in the months ahead.

American Power Conversion Chart - 60-minute interval.

On January 18th, I profiled shares of American Power (NASDAQ:APPC) as a bullish trade at $15.50. A couple of days later the stock rocketed higher to $18 on "rumor" the company was a takeover candidate. I "hate" these types of rumors as it often blows up in the face of those that trade them. Traders that liked a 12% profit in the stock could have sold and not looked back as the stock drifted below the 50-period MA. Let this be another lesson to what can happen if you're buying a rumor. We weren't buying the rumor on the 18th, but it didn't hurt us if we had sold it near $17.50 on the 23rd. It's still a traders market.

Traders that want to incorporate supply/demand charting into their trading strategies can get free charts at www.stockcharts.com

Jeff Bailey
Staff Analyst

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