Coffeepot suggests the use of TA to evaluate potential stopping points. One such method is the Japanese candlestick. When ANLT fell briefly to 32 intraday and then roared back to 40 it entered a period during which it showed the dark cloud cover pattern followed by a bullish engulfing pattern. These formations suggested that the stock would hold in the high 30's. Not only that, but the stocastics moved above 25 during this period. This was good, I thought, as I had bought ANLT at an average cost of 40.
Nope. It fell abruptly to the low 30's, at which point it displayed the piercing pattern indicating a bottom reversal. Not only that, there was support at 30. It did hold for several days in this region and a number of posters bought thinking we were at a bottom. I agreed, I bought more at an average price of 30.
Nope, down it went. It was at this point that I thought of another way to look at the stock to see just how far it might fall (and how much pain I was going to have to endure). The answer was around 24 (see #475), which was pretty depressing, so I put in limit orders at 22 and 23 (I figured it might "spike" down from 24 briefly and I could get them at a slightly lower price). These orders were filled last week.
Now, some would say, you should wait until it is done falling and has based before you buy. This sounds good, but how do I know it has based? Has it based now? Are people buying now at 26 1/2? Or will you wait for it to develop a clear uptrend before buying in?
In your post, you have mentioned just "two" TA indicators, namely Japanese Candlesticks and Stockchastics.
I am somewhat surprised at this, due to all the posting advise from the CHSE board from myself and all the other TA's advising to use many indicators in combination for any read!
I believe I also posted this same advice on this board. One has to look at "many" indicators at any one point to get the best possible read of the situation. You can't rely on just using one or two indicators to make a TA decision with. You will most likely get burned doing this! I use Stockchastics,MACD, Williams%R, Candlesticks, Volume, Momentum, Bollinger bands, RSI, OBV, EMA 2 and 3 line, patterns and linear trend analysis the most.
It is also very important to chart different frequencies(DAILY, WEEKLY, etc.)
ANLT at this point:
Daily chart: Candle formations are overall bullish, Bollingers are"starting"to close, RSI and OBV have reversed direction and are heading up, EMA(9) has turned up and MACD has crossed with Divergence low at the signal line. These are bullish indications on the daily chart, not to mention the abrupt halt to the decline shown by linear analysis. ...Stockchastics are headed up but are nearing 80.Williams %R is rising but nearing -20. These can suggest a top to the first "bounce" off of the major decline is at hand or is nearing.
Weekly chart: Candlesticks have just turned bullish, Stockchastics are below 20 and have crossed, heading up!, Williams %R has bounced off of -100 and is heading up!, RSI and OBV have turned and are heading up. Very good indications!!....The Bollinger bands are still wide however and negative divergence is high and EMA(9) is still showing down. These can turn and improve very fast and would in any base or flattening at the worst.
So...taking all these indicators into cosideration....ANLT has most definitely made a definitive halt to the recent decline. The recent bounce from the decline low does have downward short term pressure for a rest. A decline may happen very soon, but would be a bullish decline on "overall" low volume. Given the strength I saw on Friday, and the strength of the other bullish indicators, I would be inclined to bet against a retest of the absolute low already established on the major decline. I would wait for this spurt to top out and decline to evaluate an entry point at this time or for more accumulation.
Hope this helps!....This of course is only my opinion and does not involve any news nor major market influences.
TechnicalTom may want to jump in here and help out with his perspective too....he has much more history with ANLT than I do.
Many technical indicators are transformations of the data shown in a typical stock plot. The information contained by these indicators is present in the stock chart itself.
At all of the past points where people (including me) bought on the way down, the stock had not established an uptrend. Just by glancing at the chart, it looked a lot like the trend might continue going down. So naturally, many of the TA indicators were negative. After all, momentum has to be negative in a downtrend. And in any large correction MACD and moving averages have to be bearish as well.
At some point it was going to stop falling. And when it does, the momentum-type indicators will have be bearish. I employed candlesticks for my TA example because they are not based on historical price movements and so can show either bearish or bullish signals in a downtrend. Indeed the candlesticks did show bullish signals on the way down that were all wrong, and when we actually hit bottom at 22 there were no positive signals at all.
There are some TA tools that incorporate volume with price movement and can show information not present on the stock chart. These tools presumably could show bullish signals in a downtrend and so could have value as bottom detectors. Chart patterns can also give information independent of the trend. I am not a competent chartist, and I don't have most of the volume-based tools readily available to me. So I asked for help from some TA experts.
The reads that you and others gave, did not encourage a bullish stance when we reached the 22-24 region, which it now appears may have been the time to buy (I did). This suggests that the entire range of TA tools available in concert were not sufficient to identify which of the potential entry points (e.g. 43, 37, 31, 26, 23) on the way down was the right one.
Thus, it still seems to me that TA cannot reliably tell you where to buy on a pullback. This shouldn't be a problem for me. After all, this drop is simply a pullback when viewed from long te