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Interview with Danny
(October 14, 2002)
How he places his
Stops:
Danny does not use a percentage or a
dollar/peso amount for his stops. He uses either a support/resistance
line or a previous high/low. If the stop is more than he can bear, he
will simply not trade the stock.
Some of his thoughts on Trading
and Technical Analysis:
His advice to other technicians:
"Go back to the basics...what we see in the chart is a reflection
of the overall sentiment of the market".
He says, "Technical Analysis
works because it is a self-fulfilling prophecy".
"Technicians should be humble
enough to listen to opinions of other analysts".
"If you want to strengthen your
trading style, you have to strengthen your philosophy".
"Philosophy in Technical
Analysis is to have a trend-following philosophy"
"If there is beneficial change
in ownership, there is a change of hands already, then this is the
trend, then that is the direction".
"If you get wacked by the market
and you learn something, then it's not a losing proposition".
His thoughts about the Dot.Com
bubble:
"My theory is the theory of natural
selection, Darwin's theory of evolution. If the market before use to be
100% and there were 10 companies and the market has incredibly shrank to
about 30%, then I should say that 7 of the 10 companies should close or
at least merge to serve and survive the 30% market remaining".
"People are wondering why industry
leaders like YHOO, AMZN, EBAY or CSCO are still making money, despite
the fact that the Dot.Com bubble has already burst. That's because
they're gaining market share. Its not because the market is increasing,
it's because others are slowing down. If we finally see companies
reducing the number of companies serving a specific industry, with a
greatly reduced market, then that would be an equilibrium, and it would
be self-correcting already".
"But a bull market is usually caused
by a fundamental change...maybe it would be the Biotech, which is what I
am looking at right now".
His current recommendation:
"Stay on the sidelines. Preserve
your capital and keep yourself liquid so that when the real opportunity
comes, blow it all".
Danny's Email: parabolic888@yahoo.com
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