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For starters, the patterns must coincide with the overall market. This is
far more important than the micro-details of the pattern. Stocks breaking
out after the market has made a good move will probably fail no matter how
carefully you analyze the pattern. There are only a few days per year when
it's really right to buy stocks! The key days were 5/24 when we had the
big-volume reversal off the low, and 5/30 when the market followed through
to the upside. This was your trigger to go looking for stocks. But which
ones???
Nobody seems to get it, but the stocks that had sold off the LEAST during
the correction were the MOST attractive. To call charts like AFCI, QCOM and
YHOO cups and handle base patterns is way off track. On the other hand,
stocks like ADCT, PLXS, PWER were barely even affected by the market drop!
Notice how they broke out to make new highs within a day or two of the
followthrough day. So did stocks like SDLI and TNL. These were the ones you
wanted.
I don't know why people are so fascinated with stocks in serious downtrends.
More so with cheap stocks in downtrends. People, you'll never get rich
prospecting in the junk pile! It's a strange thing. I show people stocks
like the ones I mentioned and they give me all kinds of reasons why they
shouldn't be bought, stuff like "overvalued", pe ratio, etc. But guess what?
They're the ones that are going up!
While we're on the subject, anybody notice that the entire market has formed
a cup and handle bottom? It's clearest in the Nasdaq chart. Last time this
happened was in 1996 - the patterns are virtually identical. Get ready for a
breakout.
Best regards,
Phil
http://www.patterntrader.com
free trial upon request
you will see that I'm not just making it up after the fact!
----- Original Message -----
From: Darrin Vernier <gphx@xxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Saturday, July 01, 2000 2:21 AM
Subject: [RT] Re: STK: AFCI - 2
> I add an additional qualifier to cups and handles. Since it could be seen
> from the left of the posted chart that this security was previously in
> higher territory, to me it violates one of the tenets of the cup and
handle,
> that of the pattern which indicates that everyone holding it is at a
profit
> at the anticipated breakout up from the handle. Since this issue was
higher
> at the left side of the chart, this pattern was invalidated or at least
> filtered in this timeframe. Suggested filter is that it does not need to
be
> at virgin highs, but there should be no higher highs in the given
timeframe
> window. Definition of a time frame window is of course up to you.
>
> Darrin
>
>
>
>
> >From: "Gitanshu Buch" <OnWingsOfEagles@xxxxxxxxxxxxx>
> >Reply-To: OnWingsOfEagles@xxxxxxxxxxxxx
> >To: <realtraders@xxxxxxxxxxxxxxx>
> >Subject: [RT] STK: AFCI - 2
> >Date: Fri, 9 Jun 2000 13:46:17 -0400
> >
> >When the setup does not pan out as expected, it pays to take the hit and
> >move on.
> >
> >QCOM and YHOO are recent failure examples, YHOO chart attached.
> >
> >RFMD is a similar case, only, on the positive side.
> >
> >Gitanshu
> ><< snap.gif >>
>
> ________________________________________________________________________
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>
>
>
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