NEM: Breakout - ARNA: Triangle

Excerpt of the math for the Ascending Triangle breakout in NEM, from yesterday's Comment Section:

"41.44 - 38.53 = 2.91 pts. of upside, added to the breakout.

41.40 + 2.91 = Target: 44.31 IN PLAY"

What a strong day for NEM! It nearly got to the target in a single session. The high was 44.09.

The Ascending Triangle pattern in purple is what I described to Alex yesterday. Interestingly, it's a little fractal (repeating pattern) of the larger one, in blue.

The best that I can say for myself on this one is that I'm glad that I covered my short last week, coming off what turned out to be Purple Data Point #3, and I'm glad that I didn't short it again. Yeeks!

The problem that I had with considering the long side was that the pattern was much smaller than the one in blue, and if it broke out, it would have to rally into immediate overhead resistance at:

1. 42.00 - The high of the Across The Board Sell Signal (candle circled in red with ATB above it). That signal did get us to the first downside target, at Blue Data Point #3. On the rallies to Purple #1 and Purple #3, the 34 and 55 RSIs gave a sell both times.

2. The bottom of the blue ascending line.

3. The 42.71-42.83 highs of the blue Ascending Triangle

4. 43.36 - Horizontal resistance from Black Data Point #3 of the Black Falling Wedge.

On August 31, the 8, 13, and 21 RSIs were at bullish synchronicity, so the September 1 print of 40.65, a penny above the 40.64 high of August 31, was a Buy Signal from those particular indicators.

As analysts, we have to decide if we like the chart well enough to take the signals from our indicators. Given the "mixed signals" from the RSIs, and given the immediate overhead resistance, I passed on getting long, and then I passed out when Alex called my attention to the rally yesterday. LOL.

Congratulations to any of you who were long gold stocks yesterday. Outstanding rally.

ARNA has had three trendline validations, all of which were within about a penny of being exact, give or take. The first two were validations of the upper trendline, so that's DOUBLE validated reistance. The third one was yesterday's validation of the lower trendline.

Statistically, stocks that go beyond two-thirds of the way to the apex of a Symmetrical Triangle before breaking out to the upside end up as failures. The reason for that is that the trendlines are narrowing, and the stock eventually is going to "fall over" one of them, rather than "break out" or "break down" above or below them. I've seen stocks get VERY close to the apex (where the trendlines meet) and successfully break out to the upside, but just be aware that, statistically, a bullish outcome isn't favored if desultory meandering inside a Symmetrical Triangle gets too long in the tooth, as it were.

The upper trendline comes in today, Sept. 3, at 4.923. The slope is -0.01281, so we subtract that amount each session. If, for example, ARNA were to be called higher this morning on good news, at BID: 4.92 ... ASK: 4.93, that would be a very strong indication of a bullish Breakaway Gap at/above the pattern, and that the stock is going higher.

Conversely, if the stock were to be called lower this morning on bad news, at something like BID: 4.33 ... ASK: 4.34, that would be a strong indication of a "Take No Prisoners ... This Is Just For Openers" opening, and the stock likely would go lower. The slope of the lower trendline is +0.01462, so we add that amount each session. It will come in today at 4.3608. Yesterday's low was 4.36, so any print below that would be a technical violation of both the trendline and the low of yesterday's bullish-looking candlestick that closed at better than 50% of the prior day's black "real body."