Did I see what Darvas might have seen?
Darvas Box Theory Explained
At its core, the Darvas box theory system is ludicrously simple: All one needs to do is read and understand the price action of a stock! Watch for the price of a stock to form a 'box', with a lower bound and an upper bound. When, like a set of pyramids, the boxes pile one on top of another, the opportunity to buy occurs when the stock penetrates the uppermost part of the topmost box.
According to Darvas, the stock could bounce around inside the box as long as it liked; he would not buy it unless it penetrated the uppermost box. In fact, he stated that he would be concerned if the stock did not bounce around. Darvas graphically shows this idea on page 189 of his book. However, Darvas himself claimed never to have charted a single stock. He called himself a mental chartist.
A Darvas box is basically an area of consolidation. For whatever reason, the market has decided the stock should neither advance nor decline appreciably, but rather idle sideways. When I chart, I prefer to use bars rather than lines, for the simple reason that the line chart is not precise enough. In his telegrams, Darvas requested high, low, and close for his stocks, so at a minimum that is what we need as well.
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With potential positive news coming from Petrobras and Crude holding up, Kep Corp may move up to next higher Darvas Box and the next higher Darvas Box may give me opportunity to actively trade Kep Corp once more.
I have traded Kep Corp 91 times and let make it to 100. Cheers!




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