CLF: Double Bottom

CLF had an incredible run through most of this decade, rallying from under $2 to a high of $121.95 in June, 2008. From that high, CLF was bludgeoned during the Bear Market, losing 90% of its value.

At the beginning of March, CLF put in a bottom and retested it mid-month for a possible Double Bottom (11.84 and 11.80), or "W"-Bottom (they're synonymous). The middle of the "W" (15.11) is the Buy Pivot. When that got taken out to the upside, it put a target of 18.38 IN PLAY. When calculating a target, I always use the more/most conservative of my choices, so in this case, I used the 11.84. It's fine to use 11.80, or even an average of the two. It's YOUR target that you're "aiming for."

15.11 - The middle of the "W"
11.84 - The more conservative of the two lows

15.11-11.84=3.27 points of upside on a breakout above 15.11 = Target: 18.38 IN PLAY
Using the 11.80 low would put a target of 18.42 IN PLAY.

This pattern is "skimpy" in terms of width, going up against all of that overhead resistance. Remember that targets against the trend are less likely to get MADE and monitor it along the way for any signs of trouble.


CLF took out the 15.11 Buy Pivot on March 19, printed a high of 15.72, but couldn't hold the breakout on a closing basis. The following session, it pulled back toward the 13.39 gap, but held at 13.62.


The March 19 breakout resulted in a thrust higher in the 13RSI. The March 20 pullback resulted in the 13RSI pulling back into Bullish Synchronicty with its "shadow," the 21 RSI (next number down in the Fibonacci sequence). That set up the 15.23 high of that day, March 20, as a "Buy Pivot." A print of 15.24 in the next session, a penny above the "buy pivot," was a technical buy signal based on this particular indicator.

The indicator doesn't know what the chart looks like, so we technicians have to decide whether or not we want to take the signal. Indicators do NOT tell us to buy or to sell. We evaluate the signal, and make a decision about it.

So often, I've read things like, "Technical analysis is saying BUY!" Perfect nonsense. It is the analyst who must evaluate the chart and any other technicals being employed, and come to a decision. I mention that just so no one thinks that technical analysis is going to TELL YOU the right answers all of the time. LOL.

In this case with CLF, we wouldn't have liked the pullback below the 15.11 breakout because that suggests a Breakout/Fakeout. But, in the next session when CLF:

1. got back above the 15.11 breakout,
2. printed the 15.24 Buy Pivot,
3. AND took out the 15.72 high of the breakout day..

We would have liked that a lot ;)

Smooth sailing to the target. There was a wedge (yellow) that morphed into a Bull Flag (white). Both the 18.38 and 18.42 targets got MADE. The high yesterday was 18.55 before CLF pulled back to 16.90 (most likely profit-taking at/near the target), then closed at 17.64.

Mark gets an "A" for his homework on CLF which, essentially, was correct. That's great that you guys and gals are working on this stuff, and it does require work!