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--- In amibroker@xxxxxxxxxxxxxxx, Yuki Taga <yukitaga@xxxx> wrote:
> Hi Dimitris,
>
> Thursday, November 20, 2003, 5:50:17 PM, you wrote:
>
> DT> It is interesting to watch the false readings.
>
> DT> BA fulfills any H S requirement, even the Volume expansion
> DT> at the touch with the neck line.
>
> A few things about this I would say:
>
> 1) Although the books accept H&S with slanting necklines, I almost
> never pay attention to them. I like almost flat necklines. The
> flatter the better.
>
> 2) The right shoulder is slightly higher than the left shoulder.
> That's a no-no for me. It should be no higher than, and ideally
just
> a touch lower than, the left shoulder. (Yes, I'm picky.) ^^_^^
But you speak for a 37.36 vs 37.75, ie an 1% difference ????
>
> 3) A touch of the neckline is a touch of a *support* line. While a
> H&S is generally a bearish formation, it is not really bearish until
> you get a clean, confirmed break of that neckline. This one has no
> clean break. I would say a clean break is at least one bar with the
> high lower than the neckline. Until that happens, it's a support
> line, even in a rather bearish formation. Penetration is NOT
> guaranteed by the formation itself. Maybe people misunderstand
this,
> and that's why so many claim the formation is worthless. Any
> formation is worthless if you don't play by the rules. ^_-
But, you shorted ^N225 3 bars b e f o r e the [unknown for this
moment neckline breakout], donīt you remember ??
The question that began this thread is what do we do 2-3 bars b e f o
r e the neckline touch.
IMO, BA is a typical whipsaw example.
> 4) Something just isn't very "H&S-ish" about this formation to me.
As
> soon as I saw 'BA' in your note, I went to my own charts without
> looking at your gif. I wasn't *exactly* sure where the H&S was
> without a fair amount of staring and guessing. I'd have never seen
> it; so I would have never considered it such. It's got to stand out
> like a sore thumb to me.
This would be a good end of this thread: A H&S is what we see as a
H&S and nothing more. I tried [unsucessfully] to introduce some
objective criteria following your [respectable] personal vision, but
it is the moment I give up.
> And on the one's that stand out, the most common ways to play them
> successfully (if there is such a thing as a common way to play what
I
> consider a rather uncommon formation), is not to short immediately
on
> a break of the neckline. That is similar to going long immediately
on
> a breakout to a new high -- sometimes it works, but your risk is
> greater. Instead, wait for a drop, and then a pullback to that
> neckline, then short in that area immediately when price turns down
> again. You should have some help with your short there, because
longs
> who counted on the neckline as support will often be looking to "get
> out even" on that first bounce back to it. They may hold if the
> bounce goes over the neckline a bit, but the first bar going the
> other way will knock them out of the trees like an autumn wind.
>
> (One of the great keys to successful swing trading -- especially
> short trading -- is figuring out how many got in how much trouble
> exactly where. This is what made the ^225 H&S "predictable" before
> it fully formed, IMO.)
Shall we add this "how many got in how much trouble exactly where" in
H&S criteria ? You should be kidding...
> Right now, basis the ^225, the best short area would be around
10,200
> if price returned there and showed failure. There just isn't any
> percentage shorting here in what is still a bull market (or one
> whopper of a correction in a bear market) ^_^. But this discipline
is
> why I missed the big drop this week. Last Friday's close here was
not
> pretty, but it was still no violation of that neckline. Monday we
> gapped a mile below it of course. You just are never going to get
> all of these to play like a textbook example, of course, and you can
> lose potential profit even by playing them right. ^_^ I lost
> potential windfall by covering shorts on last Tuesday's plunge (the
> 11th). But that was a plunge TO the neckline, and that was a support
> area, and indeed it bounced there. It was the right play. And I'm
> still comfortable with my decision on Friday not to re-short. I'm
> crying, but I'm comfortable about the pass. ^_^ If I made one
> really bad move this week it was probably not shorting on Monday's
> open. But I really hate to chase opens, especially here, where
> professionals dearly love to fade emotional opens in either
> direction. But Monday there was no fade -- it just dropped like a
> rock. C'est la vie.
>
> My discipline on 'falling knives' also cost me a nearly 5 percent
> gain on Canon today. But not entering yesterday was the right thing
> to do in my opinion. Another chance will come; they always do.
>
> Yuki
Thank you for your opinions, I give up at this critical point.
Dimitris Tsokakis
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