august week 1 2010, page-54

update for AWE and a method for catching those knifes without giving any blood in exchange, this is one that I use and I wait for them to turn low risk, these are only my thoughts and of course it may sound like I'm off in fairly land somewhere but seems to keep me happy :)

Firstly I like to start my analysis from the weekly charts because it is clearer to see and removes a lot of the noise on the day bars.

After bad news appears and causes a stock price to plummet the 1'st thing to do is wait for potential strength and that will take a few different forms, one being big volume down bars mostly on a wide price spread and closing off the bottom, indicating that there was some buying

But of course there could be more selling to come so that is why we wait and sit on our hands and DON'T TRY AND CATCH that falling knife, sometimes one could be lucky and it also depends on your risk tolerance as well. The selling could still come from the weaker holders but also it could be a short term trap from the stronger holders who will be selling at a slightly higher price and kind of capping and holding the stock down whilst preparing it possibly for a period of accumulation, of course some stocks don't wait and rebound much quicker but hey we just tag along on the next test in the new uptrend