AOL Chart 2
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                       (In the following discussion, please  refer  to  thisvolume table).
                       4/5     A : WRB to a new high.
                       4/6     Day 1 : WRB to new  high  on  strong  volume,but closes below the midpoint of daily range.
                       4/7     Day 2 :  Big  reversal  day  on  WRB.  20.625points which is the largest range of recent data. Volume  is  heavy  as  AOLcloses below the open, below previous low and in bottom 30  percent  of  itsrange. It also closed below parabolic trend line.
                       The close below the low of the previous  Day  2  alsoconfirmed change of direction and defined Day 1 as a swing point high.
                       4/8     Day 3 : Gave you  a  good  short  sale  entrybelow 152 which was Day 2 low. Stock traded down  to  148  before  reversingand closing in top of range at 160.50. How did you  manage  your  trade?  Inyour trade plan you marked the 148 level  as  another  possible  short  saleentry point.                       Days 4, 5, and 6 : Gyrated up and down  in  a  fairlynarrow range, but you must notice they couldn’t close above Day 3  close  orhigh. Their opens and/or closes were all within  Day  3’s  daily  range.  Wehave a consolidation that has now developed below  the  high,  and  we  knowthat we plan to  sell  short  breaking  148  low  if  AOL  resolves  to  thedownside.
                       4/14     Day 7 : Also closed within the  daily  rangeof Day 3, but this close on a WRB at bottom of its range at  150.875  raisedour short trade entry point to 150 which is Day 7’s low.
                       We still will enter a short sale below 148,  but  theDay 7 bar told us to enter first at a move below 150. If  you  look  closelyat Day 7 bar, you will see that it closed below the low of  the  last  threedays and below last seven closes. This told you the highest probability  wasdown.
                       4/15     Day 8 : You get a trade through entry  below150 as the stock opened at 152.75 and went south to a low of 135. You  couldhave added to your position as stock traded below 148. AOL  closed  the  dayat 143.875. Your next entry point is 1/8 below 135.
                       4/16     Day  9  :  Inside  day  closes  at  absolutebottom of its range at 139.75. Momentum is still  down,  so  you  decide  toenter short 1/8 below139.75 on Day 10. The close is below  the  open,  belowprevious close, and at bottom  of  range  after  sharp  drop  told  you  thesellers were still in charge.
                       4/19     Day 10 : AOL opens at 142, gives  you  entryat 139.75 and an add if so wanted trading below 135.  The  stock  hit  intraday low of 112 before closing at 115.875. This  was  selling  climax  volumefor AOL as it rallied the next day on 42.7 million shares.(see table)
                        After  a   parabolic   rise   AOL   lost   momentum.Institution A started to sell stock as did Broker B’s seller, and  then  theprocess starts to feed on itself as portfolio managers rushed to  the  exitsin fear of not booking profits at windfall prices. There was,  without  muchdoubt, some able hedge funds that with a particular  options  strategy  wereable  to  accelerate  the  stock  move  down  and  capitalize  on  the  herdmentality.  As  a  day  trader  you  were  still  able,  without  the   sameinformation, to trade in the correct direction by reading the stock.                       You were able to  enter  trades  at  high  probabiltyinflection points on the daily chart that indicated  the  ease  of  movementwas down. When you can combine this with solid intra day patterns  you  willget  better  at  this  business.   The  change  in  direction  or   reversalindicators we observed can be found on intra day trading charts as well.                       On Chart II we discussed the  initial  three  entriesthat saw AOL hit a low of 112.   There  were  seven  more  good  short  saleentries from the daily chart after AOL rallied to almost 90% of  the  175.50high which is quite common for right shoulder tops which you see  with  AOL.I marked them on the chart and also identified the  reversal  day  precedingentry.