GG gapped higher at the open and printed a high of 34.19, right at the bottom of the Bear Flag in the daily chart. It came off that high rather quickly, and I re-entered my short position at 33.71. GG continued lower, but the HUI and stocks like AEM, in particular, looked very strong, so I covered my short at 33.14, or so I thought. I hit the "Buy" button instead of "Buy To Cover" so I was both long and short the stock. Duh. So, I "Bought To Cover" AND sold, at 33.08. Try to hit the right buzzer, Melf! Sheesh...
GG continued to go down and broke the neckline, but it didn't take out the 32.50 low, the first data point on the neckline. GG printed a low of 32.57, then rallied back toward UNCH where I shorted it again, at 33.47. I had about $2,600 of house money to play with from the morning trade and from Monday's trade, but I wasn't about to give it all back. Stop: fifty cents above my entry. I got stopped out.
This still could be a H&S Top in the hourly, which might require a redraw of the neckine: the 32.50 low and yesterday's 32.57 low. We'll see.
In the daily chart, GG is "betwixt and between." It's broken out of an Ascending Triangle on a Breakaway Gap, but the pattern since then appears to be a Bear Flag, the bottom of which came in yesterday at 34.184. As I mentioned above yesterday's early morning high of 34.19 was smack on that trendline, so it was a trendline validation, and that refusal there did lead to some downside.
But, also notice that GG found support at the top of the Ascending Triangle, which is why I say that it's "betwixt and between" (resistance and support).
Ascending Triangle breakouts like this one in GG generally are bullish, and this also was a Breakaway Gap breakout, but Ascending Triangles can morph into Bearish Rising Wedges (see Morph line), which is exactly what the S&P did on its false breakout into the January 6, 2009 high. This Bear Flag showing up right here in GG also is an indication of that possibility, but GG obviously needs to break down below the neckline of the H&S Top in the Hourly chart, which also would put it back below the top of the Ascending Triangle in this daily chart.
A breakdown likely would fill the gap and possibly tag the 50/200 Day Moving averages, which are trying to make a Bullish Cross. The 50DMA, currently at 30.14, is the dotted green line; the 200DMA, currently at 30.58, is the dotted red line.
This is a better illustration of the Ascending Triangle (in purple), which possibly is morphing into a Bearish Rising Wedge, and this also shows the possibility of a large Bearish Rising Wedge (the pattern in blue).
The H&S Top possibility in the HUI still exists. If that's the case, yesterday was a move higher to form the Right Shoulder, then the 314-315 putative neckline will break. The high of the Right Shoulder should not go above the 334.33 high of the Left Shoulder, and the Right Shoulder should be narrower than the Left Shoulder, so the HUI should get going to the downside today or tomorrow if this is a valid H&S Top, I should think.
Gain: about $150. I worked hard for that money. LOL.
5 comments:
Melf,
I believe that if you find yourself both long and short in the same account, you can ask the margin dept. at your firm to zero the two entries out. In effect they journal the long to closeout the short. Of course it may be easier and not too expensive to just buy and sell to unwind.
Melf,
I am looking at your GG charts and I keep seeing a pennant. I thought that was usually bullish yet you call it a bear flag. I'm very new to TA so I ask am I totally misreading the chart?
Good Morning, Mark,
I didn't know that the trades could be zeroed out. Thanks for letting me know that. It worked out fine since I closed out the positions at the same price. It only cost me the commissions, which I deserved to pay for being so dumb ;)
RE: The Bear Flag, the slopes of the trendlines are very close: the top is roughly $0.30; the bottom is 0.34, so those are close enough to call it a flag, but if you want to call it a pennant, that's fine.
When a pattern like that is RISING, it tends to be bearish, particularly if volume is less as the stock moves higher. Basis the intraday chart, when GG made its recent high of 35.47 on March 26, volume was less than it was when it made the previous high of 35.42 on March 25, but volume is just one piece of evidence, so we'll see.
Basis the daily chart in GG, the 144/233RSI's just gave a Buy Signal on the print of 34.20, a penny above yesterday's high of 34.19, which is a "Buy Pivot," so that's looking bullish. Yesterday's low of 32.57 would be the stop loss for that particular signal, and a print below 32.57 also would break the putative 32.50-32.57 neckline, so we'll see on that, too.
I'm not going to short it today since that's looking pretty strong.
The technical terms for the acct. are type #1= cash; type #2=margin; type #3= short. Thus you want the margin department to move the long trade(type#2) to type #3. Sorry if I used pennant vs. flag. Goes to show just how inexperienced I am in this. What I guess I was getting at was that it looked bullish to me. What I missed were the subtleties of the flag pointing up and the weak vol. Thanks for the lessons
Mark,
Actually, it would be a wedge rather than a pennant because in a pennant, the upper trendline would slope down and the lower trendline would slope up, just like a pennant.
Since both of the trendlines in GG point up, it would have to be either a flag or a wedge.
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