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--- In amibroker@xxxx, "Steve Karnish" <kernish@xxxx> wrote:
> Dimitris,
>
> And yes, I did read your post and I couldn't believe you would
imply that a descending triangle is a reliable chart pattern (but,
it's tough to argue with the success of this trade). I've read
Edwards and Magee five times, taught Bar Chart Analysis in
undergraduate and graduate schools and have studied charts for thirty
years... "don't bet the farm on a descending triangle". Now, I
wouldn't want anyone to take my word for it. I'll let John Murphy's
research speak: He tested the S&100 stocks with his Chart Pattern
Recognition software and found that "descending triangles" are 52%
profitable after a signal As he says: "Only the 100% objective raw
patterns and their accompaninying signals were used to calculate the
results." What a joke! I consider the whole unscientific test a
sham. I'm sure you can support your descending triangle trade with
much better numbers than Murphy. After all, this one's a terrific
winner for you...you must have evidence that this formation is
reliable enough to risk capital on.
Ascending and/or descending triangles are not always verified. the
same with other patterns or candlesticks formations.
some of them have very poor statistics. We discussed here a lot of
examples last [hot] summer.
According to my Amibroker experience [I use it since May 3, 2001 as a
registered user and, right or wrong, I use it ...everyday] line
patterns are not the most reliable tools.
But, I can not ignore them at all.
In your case, the descending triangle of ^NDX was just a not-to-
ignore warning. The recent support, formated after last September
low, did not seem to be that strong, especially after the violent
breakout. [To notice here that many Ellioticians were anxiously
waiting for a long white candle for last Friday, to confirm a morning
star and a change of the recent downtrend.
Instead of a big white, they received a remarkable black and now they
speak for a different wave.]
Anyway, everyone is following his own rules, especially when he risks
his own money. It is not the same when you post to the List [and I
belong to this list] a simple and undocumented "Buy".
As I guess from your recent postings, you are a sensitive and
responsible person and I hope you will understand my tone.
Dimitris Tsokakis
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