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<DIV>Good post. Of the two possible flags, I would suggest that the current bear
flag best fits the definition of a flag which should include a relatively small
retracement, certainly no more than 38% and preferably no more than 25%. The
indicated bull flag has a very large retracement relative to the immediately
preceding rally (pole). The rally/correction ending 10Feb is a bit closer
however its flag was sloppily in excess of 38% retracement. The generally
accepted view is that a tight flag (25%) will expand from the retracement pivot
by a distance equal to the length of the pole. The bars in the flag should be
accompanied by a very noticeable drop in volume (daily or tick volume for
intraday). Some months ago I posted a very nice trade in real time based on a
bull flag in the S&P using an intraday chart.</DIV>
<DIV> </DIV>
<DIV>One other thought here regarding the bear flag ... the pole here very
nicely fits as a EW w.3 and the flag is likely a w.4. AGet suggests that several
more days of sideways and/or up action is needed for the w.4 to "mature" which
should be followed by a good 3-4 point short trade opportunity.</DIV>
<DIV> </DIV>
<DIV>Personally, I like both flags and wedges for trading ... flags which are
very tight and wedges which breakout in the direction of the trend. Curtis
Arnold's book PPS Trading System does a very nice job on trading wedges.</DIV>
<DIV> </DIV>
<DIV>Earl</DIV>
<BLOCKQUOTE
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A href="mailto:t-bondtrader@xxxxxxxxxxxxx";
title=t-bondtrader@xxxxxxxxxxxxx>T-Bondtrader</A> </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A
href="mailto:realtraders@xxxxxxxxxxxxxxx";
title=realtraders@xxxxxxxxxxxxxxx>realtraders@xxxxxxxxxxxxxxx</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Wednesday, May 17, 2000 1:40
PM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> [RT] Waving the Flag</DIV>
<DIV><BR></DIV>
<DIV><FONT face=Arial size=2>For those whose learning curve has some way to
go, here are two examples of flags which often point the way. The
Bull Flag with its down angle and the market breaking to the north, and the
Bear Flag, with the opposite directional indication.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT face=Arial size=2>As patterns go, they are both quite good, but the
big but is that you do not know how long the flag is going to be. Since
both are periods of congestion, the breakout could, technically,
be either side of the trendlines. Whichever way, the
interesting point is when the market is approaching the extremities and
watching and trading what you see and not what you think you ought to be
seeing...</FONT></DIV>
<DIV> </DIV>
<DIV><FONT face=Arial size=2>In my book, they are nowhere near as strong as
wedges, which even with the ones that break the 'wrong' way still break
and give you the trade. So far as the way the current Bear Flag is
shaping up, it is reinforcing other bear perceptions, which should in theory
be good news for the stock market. Anyway, some food for thought
following the lack lustre day after the rate hike (which had so obviously been
factored into the market beforehand - as all the gurus are saying,
now!)</FONT></DIV>
<DIV> </DIV>
<DIV><FONT face=Arial size=2>Take care...</FONT></DIV>
<DIV> </DIV>
<DIV><FONT face=Arial size=2>Bill Eykyn<BR><A
href="http://www.t-bondtrader.com";>www.t-bondtrader.com</A><BR>"Learn to read
the tape"</FONT></DIV>
<DIV> </DIV>
<DIV><FONT face=Arial size=2></FONT> </DIV></BLOCKQUOTE></BODY></HTML>
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