5 replies to this topic

[johngeorge]

The Falling Three Methods pattern is considered
a rest from trading. The psychology behind a move like
this is that some doubt creeps in about the ability of
the trend to continue. This doubt increases as the small
range reaction days take place. However, once the bears
see that a new high cannot be made, the bearishness is
resumed and new lows are set quickly.

Note: The accuracy of the description above is dependent
upon how close the recognized pattern resembles the ideal
pattern.

Excerpted with permission from Candlestick Charting Explained by Greg Morris.

http://www.hotcandle.....e Methods.htm



http://stockcharts.c...5581&r=8060.png

[vitaminm]

rut @805.45 5min buy R@810 15-60min sell.....S@780 daily buy....R@850

[gannman]

john imho the bounce in the iwm looks entirely corrective to me and the drop from july into august looked impulsive this suggests the main trend is down and will resume as soon as this correction is over which i feel is close regards gann ps i work for someone called georgejohn so whenever i see your name i

[Doug]

The Russell 2000 had very anemic volume all week averaging only 675 million shares daily. Back during the August rebound the Russell managed 1.2B to as high as 1.88B shares per day. The Russell is showing absolutely no buying by funds. The Russell has put in two lower highs and lower lows since the post Fed bounce and has drifted back to close just over prior resistance at 800. The Russell appears poised to break that resistance, now support, and head sharply lower next week. I am just not seeing any support from fund managers. This is prompting me to be ultra cautious for next week. The recommendation for the week is to be short under 800 and buy a dip to 780. If by chance we do move higher I would not go long until the Russell moves over 815. Russell 820 is also resistance but moving over 815 could generate some short covering and push over that 820 level. I would be cautious of any longs ahead of the Jobs report on Friday and look to follow any market move after that report. It could be extremely bullish or extremely bearish so consider an index straddle on Thursday in cheap October options to capture any move on the news. Hopefully things will be a little clearer on Tuesday night from a vantage point two days closer to the jobs event.

Regards,

[johngeorge]

Thank you for your commentary and analysis. Great professional stuff. Below is a daily chart of the RUT. For disclosures sake I dont have any position in RUT at this time nor is the RUT chart with annotations below my work. (I am not an ewaver) The chart is posted here for informational purposes only. At present I have a very small long position in the Q's as a first attempt to capture the "end of month/first of month" buying.
Best to you


Russell 2000 Small Cap Index (RUT) Daily Chart

[borland]

Looks like a bullish flag formation to me. Volume seems to confirm a bullish flag. A breakout would give a "measured move" target to the 85 area (iShares IWM).