From June 9, on AKS:
"AKS Double Bottomed on March 2, at 5.39, and that it would rally 261% in just over three months' time, very near the 284% gain projected from the 20.75 Double Bottom target that is IN PLAY."
The 20.75 Double Bottom target in AKS got MADE and was exceeded in yesterday's session. The print high was 21.70, for a sizzling 317% gain off its Bear Market low.
This chart is a great illustration of why, if you're properly positioned long an upside technical breakout, shorts are your VERY best friend, so don't get mad at 'em ;)
Anyone who shorted AKS because it was "too overbought," or because a rally of 100% was "too much," or a rally of 200% also was "too much" has been caught in a wicked squeeze. Coming out of the Symmetrical Triangle (in purple), this was a stock on a mission! Up...up...up...merciless on the shorts.
Lesson: Don't hold on a technical breakout that has gone against your position Admit as quickly as possible that you've been busted, and GET OUTTA THERE!
From June 5, on the USO:
"Those who shorted what looked to be a Bearish Doji Star Hangman at the top of the Rising Wedge on May 27, playing it for a bearish resolution, have a problem. They're short TWO technical breakouts to the upside, and their positions currently are under water by about 10% vs. a loss of only 2% if they had covered the May 28 breakout of the Rising Wedge. That could change for The Bears, but at the moment, they're fighting Ms. Market."
The USO has continued higher, making it very difficult on those caught short, or initiating shorts, on one or both upside technical breakouts.
Lessons:
1. Rising Wedges are not always bearish. There is no "always" in the stock market.
2. Rising Channels are not always bearish either.
3. Same as AKS: Don't hold on a technical breakout that has gone against your position Admit as quickly as possible that you've been busted, and GET OUTTA THERE!
3 comments:
Kevin said...
"Melf, if you are trading on a daily chart, do you wait for a daily close? Same for hourly, 5 minute, etc..."
Kevin,
My apologies, I didn't see your question from two days ago until just now.
In the intraday charts, depending on how good the pattern is, (or the patterns are, if there are "nested" patterns, or multiple patterns), I often will go in ahead of the breakout, once a Data Point #4 looks like it has been established, with a stop below the low of Data Point #4, for a nice risk: reward trade.
On the daily charts, again, especially if I've got a Buy Pivot signal off the Fibonacci Sequential measures of relative strength, I'll take the Buy Pivot, ahead of a breakout breakout or breakdown.
The less "long-winded" answer: "It all depends." ;)
For example, look at today's AKS chart, specifically, at the Symmetrical Triangle, in purple. At Data Point #4, you'll see a Green "21," which means that the 21/34 RSIs had gone into Bullish Synchronicity (readings that are nearly identical), and that the high of the prior day, the little black candle, was taken out to the upside with a very nice Bullish Engulfing pattern.
The high of the little black candle, 13.33, was the "Buy Pivot," so a print of 13.34 was a Buy, based on that particular 21/34 RSI indicator.
We then have to look at the chart, and decide what, if anything, we want to do about that "Buy" signal.
Even though the pattern hadn't broken out, we can see that the overall chart was "constructively bullish" with the Double Bottom, and with the prospect of a Symmetrical Triangle breakout (the pattern in purple).
Nice risk:reward entry at 13.34. Stop: below 12.12, the low of Data Point #4.
Risk: 1.22. Reward: MUCH better than the risk. The 15.86, 19.21 and 20.75 targets all got MADE.
Drat! It ended up being a long-winded answer anyway. LOL.
Melf, Good Morning.
More questions. I've noticed that you use many different moving avgs., charting techniques, patterns etc. to make a decision,how long does it take you to start from scratch and complete your analysis? Also, how do you organize your charts so you know which line is,in your opinion, the active influence?
Good Morning, Mark,
Tough question to answer. I would like to be able to tell you that I have have a standard, rigorous approach to chart, to which I always adhere, but I can't. I look at whatever chart "grabs me," and often spend well over an hour studying it.
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