PHK - emailed to subscribers - Mon, 06 Nov 2006

Here is what I noted in email "a review of stocks", sent October 1st:

"One stock to keep an eye on for a break into all time new highs, phk, into water filtration, key concern for future years if they get their technology right. Remember here, this is where Gann can be really helpful: there is no need to buy whilst the stock goes sideways below the highs, wait for others in the market to tell you better fundamentals are arriving soon when buying forces price into an all time high. Said Gann, never be in a hurry to buy, wait for the market to show its direction. You can be sure insiders will know when this stock is going to produce good news, they will force the price up. We just get on for the ride by buying the break. And there is only 130 million shares on issue: if the company gets it right, price will do the right thing for buyers of the break.

So make use of STEX and put an alert on, just below those highs, and do nothing else till it goes off. "

That alarm went off last week, it indicates higher prices to follow. Which is happening presently.

I learned this from Gann, and it has been very profitable over the years. I teach this in class, and these sort of emails help you see the practicality of what is taught.

Even more important than being profitable, it has reduced the stress of trading. (It is nice to see stocks you own go into the new highs list...) News is always with the trend, so get in on the trend. This is from Truth of the Stock Tape, page 67, the Mexican Pete example. Gann shows it again on page 122. Buy across the break of accumulation, especially if the accumulation has gone on for a good deal of time, the more the accumulation, the better the break.

Gann shows this again, and how useful it can be, in Wall Street Stock Selector, chart no. 6, Southern Railway, page 86. Have you done all Gann's examples ???

You actually do not need to know anything about the stock market - nothing at all - to do this successfully. I have yet to find a better, more profitable way to trade. It has however been my teaching experience that most people generally come to this conclusion only after they have exhausted all other trading options.

If the stock holds a strong trend, it will not close more than three bars in a row down. Gann, page 67, Wall Street Stock Selector, the Rule of Three.

There are probably better examples of accumulation breaks to find on the market than this one, but by getting into new highs, nothing but 'blue sky' is available upwards. The up trend usually continues, (after all, a stock cannot get to five dollars, without hitting four first, if you know what I mean) if not, that is what the stop loss is for.

In a similar sort of way, one could watch avd.

One of ganns classic shapes, ada coming off accum lows. ada.png

Guys, this is not a time to be long term bearish, there are too many Australian stocks moving off lows, out of long term accum breaks, mxg, wal, (not yet, but one for the watch list) hyo, dtl, asu to name a few, this is really bullish and indicates a bumper 2007.

Even the dog stocks are barking, oec

Building and building services stocks into all time new highs, mah, prg. Banks reporting bumper profits. A recession in the next half year is not possible. But remember, at the peak, things will look rosiest, and few will be expressing worries...

New highs brings new shorts. On the 23rd October, word had it on the Street, short covering drove the afternoon prices to new highs. In markets, you either learn to never short new highs, or go broke. Meanwhile, Dow options figures are suggesting US players were betting on a large correction in the immediate future. They will lose their money too. Never ever, EVER, short new all time highs. You will lose.

To something else:
Notice that Western Australia is finally going over to Daylight savings, like the rest of us (almost), with a three year trial period, then a referendum in 2009 to decide, with politicians permitted a 'free' vote on the issue. What I observe about that one: on issues that are practically without consequence or meaning to the country, pollies get a free vote, and the people get to decide. But on the issue of say TV and broadcasting licenses, many changes of which have been made lately, there is no referendum now is there... That's because a capitalized rent is involved, that once enclosed is worth plenty to the owner.

meanwhile, the largest, biggest, most....

I keep saying, the real estate cycle will run at least 18 years, oh ye of little faith.


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