DNDN: Ye Olde Knuckle-Biter Update

Review from the July 11 close (chart above) in DNDN:

"Technical analysis doesn't TELL US what to do. It only gives us information, and in this case, the information is, "There is evidence that the upside breakout of this Symmetrical Triangle "could be" a Fakeout/Breakout. The upside targets are ON HOLD as long as the stock remains below the breakout. What would we like to do about that?"

That's a money management decision, and it's up to the individual to make that determination, but it's important to have a stop loss in mind, in case the stock goes south so that we don't become bagholders (I think that I dislike that term so much because I've been a bagholder too many times...LOL).

Some players will give it another day, then sell if it closes back below the breakout a second time. Others will use the 39.22 low of the June 30 candle as their stop loss. Others simply will throw it in on the first close back inside the pattern, for a small loss. If the stock breaks out again, it always can be bought back and turned into a gain, given that the upside targets that would be back IN PLAY.

Taking a loss never is fun, but consider it a part of doing business. There's no getting around it. We WILL have losses, but if we employ sound money management skills, our gains will exceed our losses. Be objective and view it as "the trade went wrong," not as "We are wrong." It's best to get the emotions out of there.

Yesterday's close of 39.20, two pennies below the June 30 low of 39.22, was downright evil because it makes it very difficult to defend being long an upside technical breakout when the stock has closed below the "good news" low.

The trade also is more than a "Ye Olde Knuckle-biter," with the stock closing well inside the Symmetrical Triangle pattern. Traders who threw it in on the first or second close back inside the pattern are glad that they did, I would suspect. Buying the breakout at 41.56, or higher, now is a paper loss of 5.7%, or more, at yesterday's 39.20 close, so it's become a difficult trade.

Just something to think about. Analyzing charts is one thing. Actually play them is something else altogether and not always easy, as evidenced by this example of DNDN."



UPDATE:

False breakouts and breakdowns can be ver-ry frustrating, as evidenced by what has occurred in DNDN since the July 7 close of 41.19, back below the breakout.

Trendline #2-#4 came in yesterday at 38.217. The close was three-tenths of a penny above it, at 38.22, on a Doji Star Hammer that possibly is bullish, so The Bulls who (1)sho didn't throw it in at the 41.19 close below the breakout, (2) who didn't throw it in on the 39.20 close below 39.22 support, and (3) who didn't sell on yesterday's significant break of Trendline #2-#4 support still have a chance here with "Ye Olde Knuckle-Biter" close smack on the trendline, but...UGH.

Notice how, after the "good news low" of 39.22 got broken on a CLOSING basis on July 11, it became resistance on rallies (the four red arrows). There were upside penetrations each session, intraday, but it was no good and the stock got sent down for the test of trendline #2-#4. The high of those four sessions was 39.52, so The Bulls need to hold here and go up and CLOSE above that, at a minimum.