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         Daily Blog - Tiger Software

                            August 27, 2007

      When "Resistance" Works Best

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              to william_schmidt@hotmail.com







            8/27/2007      When Is Resistance Really "Resistance"?   

         How can we spot it?  How can we trust it?  How can we have enough
        confidence in it, To Sell at it and not to Buy?

           Technical analysis helps answer this.  Much of it is based on psychology.
         "Resistance" is the point where fear of an impending decline is greater
         than the greed inherent in the bullish outlook.  It is the point where prices
         are most likely to churn for extended periods of time.  It is also the point
         where prices may suddenly, without apparent reason, reverse and decline.  

               A stock rises to resistance when:
                            It has just fallen at least 15%, say,  or more and then rises back up to its old high.

                            It rises back to a level or zone where prices have previuosly been turned back many times.

                            It rises back up to a well-tested price-downtrendline.

                            It rises up to a key
falling moving average.  We like 10-day, 21-day, 50-day,
                                      30 week, 200-day and 52-week moving averages.

                            Even more, it rises up to a set of nested key moving averages.

                            Many times once a stock  gets past its declining 10-day moving average, it will rise
                                    to the resistance of its falling 21-day moving average, and if its surpasses
                                    that it will test the resisrance of its falling 50-day moving average.

                            In a bigger decline, it recovers 50% of what it had previosly lost.

                            Some people believe that Fibonacci numbers pose resistance to rallies:
                                           1, 2,4, 5, 8, 13, 21,34, 55      (I don't  see this.)

                             Easy round numbers are more reliable points of resistance.  They are psychological benchmarks.
                                          Sellers feel good when they get such prices as 5, 10, 20, 40, 50, 100, 1000... 14,000.

                             Traders may be happy with a quick 10% profit.  Be aware of this if you a buy
                                          a breakout.  Late in a bull market, that is all a stock may achieve on
                                          a breakout.

                              A failed breakout will often find resistance on the next rally exactly at the point
                                          where the breakout failed.

                              Failed support levels tend to be resistance on the next rally.

                               Prices will often fill a price gap but then meet resistance once the gap has been filled.

                               This is only a start.  The skilled technician knows that these principles should
                                        be supplemented with measures of momentum, relative strength and volume.
                                        Thus, negative readings from our Accumulation Index make resistance
                                         much more reliable.  If a stock's relative strength and momentum are
                                         waning, the resistance is additionally reliable.  

                              Come back here a little later and I will have linked some examples to what I have
                              said here....


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"Resistance" is a noble word. 

             It often means refusal to accept something vile and unethical, as in the case of Europe
             under the Nazis,
                              I was weaned on stories of their courage.
                                          Yugoslav Partisans (
) under Janko Bobetko, Tito.
                                          Polish Resistance (Irek) -  http://www.polishresistance-ak.org/
                                          Russian Resistance (
                                         Jewish Anti-Nazi Resistance 
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                                                  French Resistance (Maquis under George Millar
                                                  and under Charles de Gaulle)
A group of scientists and lawyers working in Paris led by Boris
                                                      Vilde began publishing a clandestine newspaper calling on the French
                                                      people to resist the German occupation. The Musée de L'Homme group
                                                      was infiltrated by a supporter of the Vichy government and as a result
                                                      virtually all of the men and women involved with producing the newspaper
                                                      were arrested and executed. It is claimed that one member of the group,
                                                      Valentin Feldman, shouted at the moment of execution: "Imbeciles, it's for
                                                      you, too that I die."

                                          Greek Resistance (Andartiko)
                                          Belgium's Resistance
                                          Dutch Resistance (Einhoven Resistance).
                                          German Resistance
                                                       White Rose in Munich -
Its leaders, Hans Scholl, his sister Sophie Scholl,
                                                   and professor Kurt Huber were arrested and executed in 1943 for the distribution
                                                   of anti-Nazi leaflets.  

                                                       Edelweiss Pirates in Duesseldorf - These were conservative military officers
                                                   and diplomats believed that Hitler's violent death should signal a general anti-Nazi
                                                   revolt. Military officers attempted to assassinate Hitler on July 20, 1944, in his East
                                                   Prussian headquarters at Rastenburg. Colonel Claus Schenk von Stauffenberg left
                                                   a bomb in a briefcase near Hitler during a military briefing about the eastern front.
                                                   In this plot, Karl Goerdeler, a traditional right-wing conservative politician, was to
                                                   replace Hitler as chancellor. The group even included on its fringes some disillusioned
                                                   Nazis such as Berlin police president Wolf Heinrich Count von Helldorf and Criminal
                                                   Police (Kripo) chief Arthur Nebe. Hitler survived the blast, the coup attempt failed,
                                                   and Roland Freisler, chief justice of the People's Court in Berlin, presided over the
                                                   trial of those implicated in the plot. Invariably, Freisler convicted the defendants.
                                                  Most were executed..."
                                                  (   http://www.ushmm.org/wlc/article.php?lang=en&ModuleId=10005208   )


Resistance during World War II occurred in every occupied country.  The means used  
                   ranged from non-cooperation, disinformation and propaganda to hiding crashed pilots and
                   even to outright warfare and the recapturing of towns.

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                          Resistance also applies when a woman rejects a man's advances or chooses
       not to be seduced, or a consumer who uses the mute button during TV commercials. 

                          To an electrical engineer "Resistance" has a precise formula, measuring the
      extent to which an object will not permit an electrical current to pass though itself.   
      Oehms = Volts/Amperes.   Resistance is a negative force like inertia.  It just won't go along 
      for the ride.  It is too revolting.                 



                             Resistance To Jokes Is Measureable, too.
                             This is Easily Demonstrated.

                I get a charge from this, though.  Really, just for you.  No charge. 

Atom 1: I just lost an electron!
                                       Atom 2:
Are you positive?
                Should you know an uppity physicist, try this.

Joke teller:
                 "What is the integral of 1/cabin d(cabin)?" (say this out-loud and it will make more sense.)
Physicist: "How cute! You get a log(cabin)."

Joke teller:
                   "No, Sorry! It is a beach house. You forgot to add the constant C (sea)!"

              Enough already?  Just one more. please...
                         Q: Why don't the French ever eat two eggs?     A: Because to them, one egg is un oeuf.























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