Took Long Enough...

Unanticpated events, have cause a serious hiccup in my post frequency. Hopefully I can roll out one stock, and do the rest tomorrow morning. Thanks for you patience.

As I looked through each stock that was requested, I tried to take a handful of the more complicated looking charts to help you make sense of them. Several of the stocks mentioned were fairly easy to interpret...whether it is in a simple uptrend, pattern breakouts, or stocks with strong momentum. The five I chose to write about were a few that looked a little tougher to read. PLEASE NOTE: I am making sense of the price charts of these stocks, not analyzing fundamentals, industry groups, lake plays, etc. Anyway, Let's get started...

ADBE

It looked like there were differing opinions on this chart in the comments, so I want to throw in my two cents on it. First, I see neither a double top, nor an ascending triangle. Why? Well a double top must confirm with a break of $37.50, or create a lower low. This has not happened yet. I would also disagree with this being an ascending triangle, since it must confirm with a break of $42.50. This too, has not happened yet. "A pattern is not really a pattern until it is confirmed." I know you all know that, and that you were probably looking forward into the future to guess what the outcome would be. As of nbow it is too early to tell if this will be an ascending triangle, symmetrical triangle, double top, triple top, etc. Rather than give it a name so early, let's discuss the facts. Here is a copy of my chart...
What is most interesting to me in this stocks price action are the last two retracements to support. Look at the difference between the two. Can you spot any differences? I can...

On the first retracement there were 9 down days, 2 up days taking a total of 11 trading days to reach support. The daily ranges on these 11 days were average/slightly larger than an average range.

On the current retracement down to support, we are 16 days into this retracement and still not at support. The stock is taking a little more time than its previous retracement to go down. Notice that the candles have been shorter trading range days, and a few dojis there as well. It seems the stock is not as adamant about going down as it was on the last support bounce. Avg volume is alos a lot lighter on this retracement than it was on the prior retracement.

Bottom line: If the stock shows any type of reluctance to break support on this potential topping pattern, I would see a fairly good trade here to the upside. A bounce at support could cause this stock to want to try and test resistance again. From $38-$43 a five dollar reward is in the making. Granted this is shaping up as a channeling (sideways trending stock) opportuinty, but a trade I would take at $38. A close below $38 would be my risk. Awesome risk reward.

Great job explaining it and the details we often miss. Are you doing Master talk to night? Your name was listed on it earlier today?

Regards,

Randy B.

Thanks Jeff,

I liked your explanation. Next time when I see a similar situation will also paid attention to the candlestick the way you did.
Good point on the volume. I saw higher volume on the last three down days comparing to the first retracement but did not realize about that has not get to the support yet and the number of days.
I will watch it to see which way to trade it.

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About me

  • I'm Option Addict
  • From Saratoga Springs, Utah, United States
  • I am a professional trader and an instructor for Investools. I've had relations with the markets for 9 years. Born in Concord, CA, but reside in Saratoga Springs, Utah. Father of THREE, Husband of one.
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