Optus CWO 1/5/00

Optus CWO 1/5/00

The Optus chart gives me a chance to illustrate some simple yet powerful charting concepts. Let's say you bought CWO at $3.90 early November. (I know subscribers who did so we can talk actual events here) Why would you buy here anyway ? The stock was breaking across previous tops - into new highs potentially - a bullish sign and telling you that good news is in the pipeline for this stock. (See earlier posting on Optus)

As the stock breaks into higher prices across $4 volume increases, best seen in the daily chart, cursor highlighted. (The daily chart shows Oct. to Feb. only.)

Once bought, and the trend then continues, a number of strategies could be instituted. Ask am I a trader or investor here ? If you like the company and its fundamentals, just hold. If trading, follow the trend. CWO for the next five months did not at any time make a lower low, keeping the trade almost stress free. You could decide at the break of any prior support, a low, to sell. Any break of the trend line gets you out, or throw a moving average on the chart. I have a 20 week moving average on the weekly. Just this alone would have held you in to at least $5.50 or so.

Or put some numbers on it. Note on the daily, CWO made runs of about a dollar or so (roughly) each time it broke into new highs, with small retracements only, right up until March, with good volume on each up move. Classic charting !

Finally note the run up from Oct 19th $3.16 to $7.80 on March 29th. A range of 464. On the larger weekly time frame, natural support should occur at 548, expect CWO to accumulate here this month before deciding what to do next. The 61.8% retracement is at 495. Note the 17th April low 515, 181 days from Oct 19th low. Emotional days both. 515 a great spot for a stop loss if you were a trader of CWO this week. (I would have liked better to see the 515 level as resting on a previous top for additional comfort and stronger support level. It isn't. Exercise care.

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