[This post came from Kim B, a repeat winner of Bank Robbery Award – Alex]There is a piece of dogma in the stock trading world: “Never double down.” Never try to correct a “mistake” in taking up a positionby adding to it when the stock has gone the opposite direction to what you predicted.My experience suggest otherwise. Once you buy a stock, your attention become more intensely focused

[this post came from Percy C, a trader, a scientist, and a highly rated presenter at the recent SpikeTrade Reunion – Alex]Let us take a look at the violation of the upper Bollinger Band (20, 2) in SPY last week. As folks undoubtedly know, Bollinger Bands represent a demarcation of a (typically) ~2 standard deviation range around a (typically) 20-period simple moving average. There are a variety of uses of the bands: some use them simply as targets, others use them to initiate positions in the direction of the excursion, and still others use them as points to initiate countertrend trades. You can find any number of sites and books that comment on the bands, including Bollinger’s own site, http://www.bollingerbands.com/Let us compare the historical performance of SPY in the weeks subsequent to a violation of the upper Bollinger Band (20,2). I pulled the 2000 – 2010 data from a reliable vendor and the 1994 – 2000 data from Yahoo! (buyer beware!), and calculated the bands, identified excursions of the upper band, and looked at price changes subsequent to that time. These data are summarized in the table below and broken down into the entire time period tested (January 1994 – last week) and the past decade (January 2000 – last week). You can see the average and median percentage price changes 1 – 55 weeks after a violation. I’ve also provided the maximum and minimum prices changes, to give folks a sense for the best and worst cases, depending on whether or not you like to trade with the excursion or against it.As you can see, the average % changes are nothing to write home about. I was also impressed that although there have been some nice bullish moves in the 8 week period after the excursions, the analysis of maximum and minimum changes seems to indicate that there is some skewing to downside risk. The examples in the past three years confirm that: four violations in the April – May 2007 time period (when SPY was ~150), one violation in August 2009 (SPY ~101), two violations right before the April 2010 top (SPY 120 – 122), and two violations in the past five weeks. Just scrolling through the numbers, it seems that the excursions occur in all three places that you might expect: (1) in the middle of strong trends, (2) right before periods of consolidation, and (3) right before major topping patterns (e.g. March 2003, May 2007). I didn’t see an obvious edge, but it might be possible to construct a system that would deliver positive returns. [Note also the usual disclaimer: these are my personal observations, and you should personally verify all data before considering any trades.]Best wishes for successful trading!Percy C

[this message comes from Tony S, a Member in the UK – Alex]As part of my planning process I occasionally look at the Monthly charts for the companies I follow. The one think that struck me was how many companies have reached what I think is a long term support resistance.Do these companies go for the sky or head for the floor. Almost all of these companies are in uptrends and so until proven otherwise you would have to say that these companies are about to take a major jump up.ANF – there has been one failed test of the resistance and 45 is still holdingAET – the 32 level is holding for the past 2 years and every break failsBA – Boeing has broken the 70 level but will it now rise to 100 or fail again at this level and fall back to 60?DE -will

[This message came from Kim B – a SpikeTrade who has just earned her Bank Robbery Award – Alex]Bernanke’s Fed are likely to announce what they are going to do about Quantitative Easing at the next meeting on Nov 2-3. It appears that this market (at least parts of it) have already factored in the Quantitative Easing, so that any disappointment on this score might bring the markets down hard.Although shipping stocks have been lagging and may well rise if the quarrel with China is resolved, other stocks, commodities, and ETF’s are relatively high and have room to fall. The aftermath of the G20, so far, seems to be that the US will keep devaluing the dollar until China softens its stance on keeping the yuan low. But if the country and the markets become “surprised” to hear at next week’s Fed meeting that there is NOT to be adequate “quantitative easing,” that might swing the elections against the current administration. It appears GS is “gunning” for a fall with short positions….A negative surprise in the Federal stimulus plans could potentially produce a rout, as the timing of that would disappoint stock markets that are already destabilized by elections uncertainty. If that happened simultaneously with elections, it could severely harm the current administration’s chances of re-election in two years. I tend to believe that there will be devaluation of the dollar in the face of intransigence by the Chinese.Kim B

[ this message came from Jeremy C, a Spiketrade Member ]I am curious to know how many, if any, Spikers and fellow members do their trading under some type of business entity versus an individual account. It is a thought I ponder from time to time, but have neglected to research it on my own to any extent. It seems the tax advantages would be beneficial in purchasing any items used for trading such as charting software subscriptions, educational materials, seminars, internet connections, as well as a host of other reasons. If there’s anyone that could enlighten me through their own experiences, or recommend any good books or websites, it would be very much appreciated.Thank You,Jeremy C.

[ Percy C is a new but active Member.