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Earl, I agree with certain parts of your post but I question the pattern analysis. First, you are absolutely correct about the buyers not
allowing the sellers to overwhelm them. However, I think that's more of a sublime seller technique to entice the bulls in, no different then
gently tugging the bait to get the fish to bite. As Dorothy argued several days ago, if this is a bull reversal, then where's the volume. This
rally really lacks enthusiasm, especially after the sharp drops that occurred. You would think there'd be a lot more enthusiasm to bottom fish.
As for the bull flag, I can argue it's a pennant, but that may be more semantics or a trader's preference. If it's a pennant, then today is a
break, but I think this will fail and lead to prices below the formation. If that happens, then my bull to bear conversion is on target, but we
have to see. Also, a flag or pennant is arguable and can be defined as a forth wave correction in a five-wave corrective pattern that's
countering the WTC drop --- and today is the final fifth wave higher in that corrective pattern. If there isn't significant follow-through
after today , this move is doomed.
Ralph
Earl Adamy wrote:
> A bull flag should project at least 62% expansion of the first leg from the
> retracement low or 1147+-. Like you, I am very dubious about this market but
> if that's a bull flag, it's bullish especially in combination with the
> outside reversal and taking out of two inside days so far. The critical part
> is what happens if/when it gets back to the high because it's not a bull
> flag without a significant move above 1087.50. The only significance of the
> retracement levels is to show that the retracement has been < 25%.
>
> My trading timing is suffering from 3+ weeks off so take it with a grain of
> salt. One thing I have noticed most of the way up is that the emini sellers
> (ask size) have tried repeatedly to overwhelm the buyers but the buyers keep
> absorbing inventory and moving it up. The other thing which I noticed was
> the unusual configuration of the reversal out of the triangle formation
> discussed here yesterday. From what I hear a) there were big orders in the
> spoo pit this morning at the lows which drove the futures up driving the
> cash up in turn and b) the ESF (Exchange Stabilization Fund) is being used
> to <interfere with> <support> <manipulate> the market (take your pick).
>
> Earl
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