"Islands in the Sky" XLF

Jack Chan chart:
http://stockcharts.c...191&are=976.png

I noticed that the XLF has a '2B Sell Signal' and also the SPY is in a position where it could soon confirm a 2B sell signal

Trading FAS and watched it. Neither Edwards & Magee ("not of major significance") nor Bulkowski ("worst performance") think much of the "island top reversal" but you also have to add that we gapped down across the creek, which adds some cred. Edwards and Magee grudgingly give a measured move back to the beginning of the "minor trend" going in, which I suppose would target 14. Would target 68.26 Fas and implies around SPX 1020. Not holding my breath - have become sceptical about bearish resolutions of anything.

Edited by selecto, 20 October 2009 - 04:06 PM.

have become sceptical about bearish resolutions of anything.

Skepticism is certainly understandable, but that sentiment is what perpetuates nascent trend reversals.

Trading FAS and watched it. Neither Edwards & Magee ("not of major significance")
nor Bulkowski ("worst performance") think much of the "island top reversal" but you
also have to add that we gapped down across the creek, which adds some cred.
Edwards and Magee grudgingly give a measured move back to the beginning of the
"minor trend" going in, which I suppose would target 14. Would target 68.26 Fas and
implies around SPX 1020. Not holding my breath - have become sceptical about
bearish resolutions of anything.

Bulkowski does not indicate that Island Reversal Tops are too terrible with failure rate of 13% and 78% meeting the predicted target.

Well, I was reading from his book: "The performance of island reversals is perhaps surprising only for its mediocrity... " I guess we see.

Well, I was reading from his book:

"The performance of island reversals is perhaps surprising only for its mediocrity... "

I guess we see.

Relative to Bulkowski's listing of pattern performance mediocrity is appropriate because it falls roughly in the middle of the pack. However, mediocrity is not "worst performance." Be that as it may, a 13% failure rate is nothing to sneeze at, imo, and beats most of the forecasts, systems, etc. that are floating around and Chan is right in calling attention to it.

colion, go to Bulkowski"s website here where he discusses
the pattern and you will read this:


"In case you missed it, this pattern has the worst performance of any chart pattern - dead last - regardless of the breakout direction."

Get a haircut.

Edited by selecto, 20 October 2009 - 08:21 PM.

Regardless... IF we get a broken trendline here with a MACD cross, it's negative for financials, and no doubt the rest of the market.

colion, go to Bulkowski"s website here where he discusses
the pattern and you will read this:


"In case you missed it, this pattern has the worst performance of any chart pattern - dead last - regardless of the breakout direction."

Get a haircut.

The book states "The performance of island reversals is perhaps surprising for its mediocrity." Mediocrity is not "worst" unless Bulkowski has a new way of defining the range from best to worst. In addition, it has a "Rank by Score" of 20 out of 32 which is certainly mid-range and not worst (score is (average move * most likely move) / failure rate). I don't see where Bulkowski defines performance but obviously he places emphasis on "Rank by Score" in the book which the website tells the reader to go to for more info. However, rather than try to understand what Bulkowski's words mean it is best to concentrate on the statistics which are a 13% failure rate, average decline of 21% and a likely decline of 10%. I doubt that few would consider a 13% failure rate and an average move of 21% to be the worst performance around.