Thursday, 14 February 2008

"The Pivotal Point"

Take the stock RIMM which was in a downtrend trend for 3 months from its Mar. 15th, 2006 relative high closing price of $29.53. It continued its downtrend until it reached a low close of $20.65 on June 20th, 2006. Then RIMM had a quick rally to around $23 in only 8 trading sessions. The market for RIMM then became inactive and dull for a few days. Then on July 10th, 2006, it started becoming active again and went down 62 cents, and keeps going down until it reaches a price near its Pivotal Point of $20.65. Right here is the time the market for RIMM should be watched carefully, because if RIMM is really going to resume its downward trend in earnest it should sell below its Pivotal Point of $20.65 by $1.60 (a 7.5%-8% decline) or more before it has another rally of importance. If it fails to pierce $20.65 it is an indication to buy as soon as it rallies $1.60 (a 7.5%-8% increase) from the low price made on that reaction. If the $20.65 point has been pierced but not by the proper extent of $1.60, then it should be bought as soon as it advances to $22.25. If either one of these two things happen, you will find, in the majority of cases, that it marks the beginning of a new trend, and if the trend is going to be confirmed in a positive manner, it will continue to advance and reach a price over the Pivotal Point of $29.53--by 7.5 % or more.After RIMM's retest of its Pivotal Point of $20.65, it sparked a new uptrend in which RIMM gained about 590% in 15 months from around $22 to $130 in early August '06 to early November '07.

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