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DT & Yuki:
FWIW, the following are Bulkowski's (Encyclopedia of
Chart Patterns) key characteristics and statistics for a
H&S:
Characteristics:
1. Shape - After an upward trend,
the formation appears as three bumps, the center one is the tallest, resembling
a bust.
2. Symmetry - The two shoulders
appear at about the same price level. Distance from the shoulders to the
head is approximately the same. There can be wide variation in the
formation's appearance, but symmetry is usually a good clue to the veracity of
the formation.
3. Volume - Highest on the left
shoulder, followed by the head. The right shoulder shows the lowest volume
of the three peaks.
4. Downside breakout - Once
prices pierce the neckline, they may pull back briefly, then continue moving
down.
Statistics (431 formations in 500 stocks in
period '91-'96):
1. Failure rate -
7%
2. Average decline of successful
formation - 23%
3. Most likely decline - 15 -
20%
4. % meeting or exceeding price
target (measured move) - 63%
5. Average formation length - 62
days
6. Average performance for (1) lower
shoulder (right or left) or (2) sloping (down or up) neckline - results not
statistically significant.
Bill
----- Original Message -----
From: "DIMITRIS TSOKAKIS" <<A
href=""><FONT
size=2>TSOKAKIS@xxxxxxxxx<FONT
size=2>>
To: <<A
href=""><FONT
size=2>amibroker@xxxxxxxxxxxxxxx<FONT
size=2>>
Sent: Wednesday, November 19, 2003 3:37
AM
Subject: [amibroker] Re: The expectation for an
H&S
<FONT
size=2>Yuki,could you please take a look at<A
href=""><FONT
size=2>http://www.chartpatterns.com/headandshoulderscharts_.htm<FONT
size=2>and tell me which example matches better to your H&S point of
view?We could add some additional Volume conditions to the existing H&S
code.1. Do you want the Volume to form a H&S too [like JYC example],
diminishing [like the BPC example] or something else ?2. Does your
picture agree with the volume expansion at the breakout [although it is too
late for any action...]3. Should we ask the 3 peaks to be a% higher than the
recent [last 3-6 months] lows4. Any MAs condition as long as the H&S
is createdTIADimitris Tsokakis--- In <A
href=""><FONT
size=2>amibroker@xxxxxxxxxxxxxxx, Yuki
Taga <<FONT
size=2>yukitaga@x...> wrote:>
Hi Dimitris,> > Tuesday, November 18, 2003, 9:32:14 PM, you
wrote:> > DT> Let us see the recent ^NDX behavior.>
> DT> After a long period we have had [Nov9 to Nov10] the first
> DT> important bearish signals, a simultaneous> >
DT> ~MeanStochD and ~MeanRelSlope divergence. The whole market >
DT> looks a bit tired and the bears have > > DT> a lot of
reasons to wake up> > DT> P2 [Nov7] is the second peak of a
probable H S > DT> formation.[sensitivity perc=3%]> >
DT> The trendlines are no longer parallel, a slight converging >
DT> wedge is apparent day by day.> > DT> If the next days
will keep on creating the H S, let us see > DT> the proper action
moment.> > DT> It is easy [and confusing] to speak after the
> DT> facts .> > DT> We have more than 5 bars to see
any complete form, let us > DT> concentrate in the details [other
leading/lagging] indicators]> > DT> and add contributions to
this thread, but, please, before the > DT> facts.> >
DT> 15 bars later we may see what was written and make > DT> our
comments [or laugh with our great texts !!]> > DT> I hope it is
interesting.> > There is NO question that this market looks very
tired. MRSI and RSI> divergences since September are
telling. These divergences persist.> > However, classic
H&S is not indicated at all, to me. The volume> signals
necessary to validate or suggest such a position just are not> there
. . . unless we use our imagination and get very creative,> which is a
violation of TA formation-spotting in my book. But> really, they
are just not there, and I don't see it.> > The plain fact of the
matter, though, is that markets do NOT hold> continuously at ~20 percent
above their 200 day SMAs. And that is> roughly where this market
has been churning higher for several months> now. In a strong
trend of course, that CAN persist for a while. But> it is bound
to come undone, and the downside risks here are not> insubstantial -- the
longer this unsustainable posture persists, the> sooner it has to come
undone. This is an index where even the rather> responsive 18
day SMA has NOT ONCE even dipped below the 50 day SMA> since they last
crossed in March. It's an index that is up a> startling 40 percent
since March. The only reason in my opinion it> has been able to
come this far, is that such a percentage is still> within some acceptable
(and even normal) oscillation coming off the> absurd bubble created in
the late 90s. But we are somewhat due for a> pullback of some
magnitude I think.> > But I see nothing right now to indicate a
major trend change, and> certainly no H&S as I need to see
them. But I see plenty to suggest> that the risks of a major (and I
think much-needed) correction are> increasing. That correction
could easily take the ^NDX as low as> 1200. But that is only about
a 16 percent pullback from the recent> highs, and would still NOT
indicate a reversal to a bear market.> > However, it could
indicate the beginning of a broad sideways> oscillation that swing and
intermediate term traders might love,> where the ^NDX roams up and down,
covering 200 plus points at a time.> > All that said, once
again I see no signs of any complete trend> reversal at all. But I
see a one-way market for 7 months in what is> more often a two-way world.
This happens. It happens over and over> again. But IT DOES NOT
PERSIST over long time periods, and this one> is getting long in the
tooth, IMO. The low-hanging fruit is likely> to have been plucked,
and the road ahead may be more "interesting"> that the road just
traveled. I think many of these stocks will be> available for
decent long opportunities at better prices than we are> now
seeing.> > Yuki------------------------ Yahoo! Groups
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