I mentioned yesterday that, while the NASDAQ sold off and the H&S Top target of 1600 got MADE, the SPX didn't give up much. If you look to the left of the chart, the SSO (and SPX) sure looked like a H&S Top, as well, but it didn't get going on the downside.
"Don't short a dull market" came to mind, as well as the dog that didn't bark in The Hound Of The Baskervilles. Why isn't that danged dog barking?? ala Why isn't the SPX selling off??
ANSWER: Because it didn't intend to sell off. The SSO (and SPX) broke out of a Symmetrical Triangle (pattern in white), then formed a Bull Flag (pattern in yellow), the bottom of which found support at the top of the Symmetrical Triangle, at 22.36. "Former resistance became support, as it should."
Oh. Oh-h-h-h.... Duh-h-h...LOL.
I got long the SSO at 22.48, coming off the bottom of the Bear Flag. As we know, Bull Flags and Bullish Falling Wedges are notorious for "morphing" (changing) into Bullish Inverse H&S patterns, so I sold at the "possible" neckline, at 22.77 (I mistakenly wrote 21.77 on the chart...it's 22.77) and placed an order to re-enter at 22.65, figuring that the "possible" Right Shoulder would come down at least that much. The market was stretched on the upside, so I was looking for some cushion.
The SSO sold off TWICE, to 22.67, two pennies above my buy order at 22.65, and I never got filled :(
Curses! That was a bit stubborn on my part, not to change it to a market order. What can I tell you? LOL.
When it became clear to me that I wasn't going to get filled, and that the market very likely was going higher, I got long JOYG again (see Tuesday morning's post, if interested) and also got long IBM (see those past posts, as well), knowing that both stocks have had multiple bullish breakouts.
JOYG moved higher. When the general market broke out, IBM went down from my entry. Sheesh. When IBM rallied back above my entry, I sold both stocks quite simply because I was falling asleep. Literally. And, with the SPX back in the mid-860's, I was thinking "possible Double Top."
I no sooner sold, than IBM started to rally, and JOYG continued higher. Curses! As focused as I was on the Symmetrical Triangle and Bull Flag in the first chart, here's what I missed...
The pattern in red is an Ascending Triangle. The highs are identical, at 22.96. The low is 22.36. 22.96-22.36 = 0.60 points of upside on a breakout. 22.96 + 0.60 = Target: 23.56 IN PLAY. The high on the session was 23.60, and the target got MADE.
Lesson: Try to stay awake next time, Melf. Yawn. Z-z-z-z-z................
Gain on the day: a tad over $2,000.
3 comments:
Good morning Melf,
In looking at the last chart, I wanted to question the targets. Am I correct that the first target (white)would be white#1+(w#1-w#2) and then later on yellow target y#1 +(y#1-y#2). I can't read the exact prices on the chart. If so, I'm uncertain why the early exit. Wouldn't a morphing pattern into another Bullish pattern be encouraging? Was this a breach of your normal discipline?
Good Morning, Mark,
I was jockeying for position, selling and wanting to enter at a lower price (22.65).
I employed that strategy twice in the QID trade on Tuesday and Wednesday (sold, then re-entered at a lower price). That worked out fine, but in the SSO, I didn't get filled on the re-entry.
Thanks, I thought that might be the case but wanted to make sure I hadn't missed something significant.
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