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54

week of 8/19/83, the price of 45 1/2. If that price was broken, it would be significant, but it is, also, the next resistance to look for a short position entry during that time frame.

Of course, 45 is a number which would be natural resistance. This would be confirmed by top at 56, and 45 being eleven points down from that top. We would, definitely, look to short this stock, at that price. Due to the price level being below a 2X1 angle down, on the monthly chart, and below the 1X1 down, on the weekly, it is a weak position. In addition, after having moved down at high momentum for a long period of time, the 45 degree angle down from top, on the weekly chart, would be another high probability price level to go short. That price level hit on 11/25/83, then becomes good resistance.

Starting on 7/8/83, look at the 2X1 angle from zero. Price hits that angle on the week of 10/21/83 at 29 to 30. This becomes important support. Price moves down to that angle on the week of 1/27/84, and the 45 degree angle from zero is at 29 on that week. Should you buy? On the monthly chart, price is still below a 2X1 angle, in a weak position, but on the weekly charts, it is above the 45 degree angle from top. The important feature, here, is that high hit on 1/13/84, as all weekly highs since that time have been against a 2X1 angle coming down from the high, again, a weak poaition, and the pattern established in July of 1983 could repeat-that is finding bottom after a sharp move down. There is a square of range coming in at thie time, but price would have to move above the 2X1 angle down from the high in the week of 11/13/83, before that move down is over on the weekly chart.

You can see price was in a very weak position, and you might have been buying puts against that 2X1 angle, and looking to sell those puts on the first weekly close above that angle on the weekly chart, from the 1/13/84 high. The drive down etopped the 78th week from the low of 8/13/82. Always use evidence to confirm a turning point in time, support or resistance.

POLAROID (PRO)

Now, use the Polaroid monthly chart (Illustration 8.3). Polaroid hit a high at 144, and I was watching this stock to come up to fifty percent of the high at 72, as well as, five times the low at 14 1/4 ie 72. The rule is, the first time a stock comes up to fifty percent of the high, after having been below it for a long period of time, it is a good short candidate at that level.

On the daily chart (Illustration 8.4), you can aee the first test of 72, in March of 1986, comes after an extreme price acceleration. The first high, at 70 1/2, comes on the 90th calendar day from the December 4th, 1985 low. Price breaks sharply after this date, but bottoms and gives one more drive up into the 99th calendar day from low, and up to fifty percent the high price made over a decade earlier. This week is 26 weeks from the September 13th low, and an excellent time and price to trade.



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