DRYS - Possible Bearish Wolfe Wave

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There are several good market lessons in this chart, so we'll do a quick review:

1. The Descending Triangle target of 40.42 didn't get MADE. Lesson: "Targets only are what the pattern suggests. Sometimes that fail to get MADE, sometimes that are exceeded by a wide margin. Monitor the trade, as it evolves."

2. The skimpy Double Bottom in January, at 48.21 and 48.75 was a clue that the Descending Triangle target might not get MADE when that pattern broke out to the upside, putting 67.03 IN PLAY. That breakout "suggested" a rally back to the broken Descending Triangle, which was just above the 67.03 target. Lesson: "Don't be stubborn, or get caught up in needing to 'be right.' Recognize a problem as quickly as possible (the Double Bottom breakout), and get out of any short postion."

3. After the breakout of the "skimpy" (narrow) Double Bottom, DRYS stopped to put in a Right Shoulder of a Bullish Inverse H&S. That strengthened the Double Bottom breakout, put 75.38 IN PLAY, "suggesting" that the 67.03 target had a VERY good chance of getting MADE, and also "suggested" that the target would be exceeded, and that the bottom of the broken Descending Triangle (69.61 - 69.81) would get re-tested. Lesson: "Multiple pattern breakouts 'tend' to pack some punch and increase the chances of targets getting MADE and/or exceeded." The Bullish Inverse H&S target of 75.38 was exceeded by a wide margin. DRYS rallied to 88.49.

4. The rally to 88.49 into release of earnings was the "flag pole" (similar to the "Lead-in" in a Wolfe Wave) for the "possible" Bull Flag that formed after earnings. The Bull Flag broke to the downside, and breakdown was validated on the failed retest at the bottom of the flag. The downside target of 65.71 also was exceeded by a wide margin, like the Bullish Inverse H&S was. Lesson 1: "Be particularly alert for a 'Sell The Good News' reaction to earnings after a strong rally into the event. Look for a "Gap To Crap." Look for a downside reversal candle, etc." Lesson 2: "Bull Flags aren't always bullish. There isn't any ALWAYS with patterns, etc."

In the current time-frame, we've got a "possible" Bearish Wolfe Wave. The "Lead-in" rally to Wave 1 is very similar to the "flag pole" rally into February earnings. Remember that Bull Flag that WASN'T bullish? We very well could have here a Bear Flag/Bearish Wolfe Wave that ISN'T bearish! Sort of a "For every action, there's an equal and opposite reaction" twist, if you will.

Regardless, I don't like to assume anything. This "possible" Bear Flag/Bearish Gartely broke out to the UPSIDE on Friday, so the Wave 5 "possible" Bullish Fakeout/Breakout is in. I'd want confirmation that it is a fakeout, which is why these fakeouts (if it is one) are so effective. "Nobody" wants to sell because the breakout looks real good, and "nobody" wants to sell short because shorting what appears to be a bullish breakout is a good way to get our heads handed to us on a short squeeze.

The top of the flag comes in today, May 5, at 89.43 and rises $0.286 per day, so we'll watch that trendline to see if DRYS closes back below it, and also watch the lower trendline, of course. As the chart stands at Friday's close, the upside breakout in DRYS is bullish.

Sorry for any mistakes. No time to proofread with market opening in under 1 hour.