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Hi DT,
Monday, November 17, 2003, 11:01:38 PM, you wrote:
DT> I know we shall never agree on the H&S criteria, if we speak for more
DT> than 2 persons [I disagree even with my code, sometimes].
DT> What I said was to write down *your* point of view [trying to include
DT> all requirements, objective or not] and then try to code it.
Hmmm. I see. Well, I can tell you when they catch my attention, and
when they don't, in very general terms. Three bumps with the center
bump higher, just coming along in sort of the normal course of
things, doesn't impress me at all. I guess for me to see a H&S, I
also want or need to see some kind of 'body'. (Heads and shoulders,
after all, must rest on bodies in the real world.) ^_^ And that
body needs to stand out a bit from the rest of the chart -- a strong
diagonal, almost vertical rise would make it do that. (IOW, the
shoulder needs to be a shoulder, not just a speed bump.)
So, a H&S would catch my attention if it came after a run up like we
had in Tokyo between May and September, but it would be unlikely to
catch my attention if it came (like the inverted form you mentioned)
as the market had been kind of scraping along horizontally. Same
thing with the inverted -- I would want it to come rather soon after
a fairly sharp decline, to really mean very much to me. And of
course, if I look at the chart and don't see it within about 2
seconds, I don't begin to look for it, but just assume it's not
there. I am very alert to not "create" things which do not exist in
my chart reading -- I think the human mind is good at this, but it's
dangerous. The truth is, there is often nothing there that is
actionable, and if I could impress this one fact on new traders, I
think I could save them a lot of grief, not to mention money.
This is just my own take on the formation, of course, and means that
I ignore a lot of them that others might pay attention to. However,
I have found that the bearish ones that develop quickly after
sizeable run ups to be pretty strong negative indicators, at least in
the short to intermediate term. Something in our nature makes us
want to buy into these, but they are disasters, usually -- especially
when you have concurrent indications of trouble (RSI divergences, A/D
breakdowns, etc.).
(BTW, we had one of the most negative days I can ever remember
yesterday on A/D: 59 up on the first section, 1,450 down, just your
basic 24.5:1 ratio, ^_^ although the secondary stocks and other
exchanges here were closer to a more normal 10:1 ratio, which is bad
enough.) And new highs: 3, new lows: 50. I look for a lower test and
then a bounce today -- we are in an area where I might test the long
side very lightly, and for very short term, although another 400 down
from here would be a piece of cake. It just is likely to be very
choppy now for a while.
DT> Thank you for the interesting discussion.
No, thank *you* for being such a great contributor to this board.
Yuki
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