FCX & NASDAQ: "The Tell"

(Click on charts to enlarge, then click on them again for further enlargement. Use left arrow on your browser to return to the narrative)

When I first was learning technical analysis, I remember reading experienced players talking about "THE TELL." In the context in which it was used, it meant that after a period of trying to figure out what the heck was going on in a chart, Ms. Market finally lets us in on the secret of her intentions with "THE TELL."

Ooooo.ooo...that sounded wonderful! I wanted to know as much as possible about "THE TELL."

Often, we will get "a" tell, like when a pattern breaks out or breaks down. Sometimes, the target gets MADE with no problem at all, but as we see so often, they also can "morph," or change, into something else which can get frustrating, to say the least. That's why I like "nested" patterns (patterns tucked within larger patterns) and multiple patterns. When those patterns are completed with "THE TELL" (a breakout or breakdown), they tend to be a lot more reliable, particularly in Hourly, Daily and Weekly charts.

A recent example of "THE TELL" was the April 11 technical breakdown in FCX. After a DOUBLE "Gap And Crap" breakout of a possilbe Bearish Wolfe Wave to the upside, "THE TELL" came when FCX broke the lower trendline of the pattern at 56.33, and in the same session, also broke the neckline of a H&S Top (basis the 10-Minute chart that we looked at back then) that was "nested" within the Bearish Wolfe Wave, breaking below 56.64. There never are any guarantees with these things, but the "body of evidence" from that "TELL" sure suggested that FCX had some downside in it from those breakdowns, and both the H&S Top and Bearish Wolfe Wave targets did get MADE with no problem at all. FCX went about dollar below the Wave 6 target line in the April 18 Doji Star Hammer session.

Another excellent example of "THE TELL" is the past year of trading in the NASDAQ Composite which we're going to walk through step-by-step as "THE TELL" unfolded, if anyone has the stamina to do it. It's good practice, and understanding charts takes A LOT of practice.

The comments are on the charts, for easier reading, to that you don't have to toggle back and forth. The charts also contain a good example of what I mean when I say that "The Bulls have some repair work to do," another example of which is the H&S breakdown in US Steel (X) that we looked at yesterday.

Happy Easter to everyone!