4 replies to this topic

[Stickan]

My favorite pattern is the upside break out of a rising wedge, which is bearish (the wedge - not the break), which almost only takes place in a bullmarket.



With a break-away gap and a measuring gap above this wedge, it could very well set the stage for the next meteoric rise.



Considering how well the market has held so far, wouldn't it be probable that it would follow the season tendency for the rest of the year?




Bill McLaren
http://www.mclarenre...C-Reports-2007/
Once explained how the market usually starts out strong - then takes a rest - coiling - and then either tanks or continues as per stage one, just like in the chart below.

So is this stage three over - is it a top we are seeing?



Hardly.
If we look at the qqqq chart below, it looks like it just started and if qqqq is going to catch up with the rest of the indexes, to close in on the top, it HAS to drag the other indexes along. so perhaps Nasdaq is the leader againg.



This doesn't look like a top either, rather like a break out - right?



Another break out. Transportation daily. Above 200MA on the 4th try - typical Gann.
And check out the "kiss of life"



And Main supportline was never seriously broken. Just a "failure break" to give the index som extra upside fuel.



Utillities, upside break of bull flag, later tested and now beak out of a rising wedge (see chart one and two...)



In other words - not a top in sight - just upside breaks.

And look at this monthly chart of Barrick Gold - a rounded bottom - at the top!

Now I have seen everything......

[swingtrader]

Stickan, Great work as always! Thanks for posting your thoughts at this juncture. Just a quick question regarding the break of the rising wedge to the upside. In most cases, it means the acceleration to the upside, right? Thanks -ST

[blackprince]

Those charts really helped in putting in bull case in a proper prospective. Thanks.

[Stickan]

Just a quick question regarding the break of the rising wedge to the upside. In most cases, it means the acceleration to the upside, right?

Thanks
-ST

If not acceleration - at least a steep rise usually will follow. I picked up a couple of other examples here.








However, my favorite chart is the break out of a falling wedge on the wrong side (downside)
Check out this IBM chart and note the failure break on the upside, just before the break down - that's usually the clue. Just as in the Dansish index above.




While we are looking at IBM, take a look at the US Dollar.
An absolutely perfekt, textbook, "bullish", falling wedge with 6 exact connection points and a pre- break in August, which "should" have resulted in the up-bounce everybody was expecting. Instead we got a failure of a faliure (don't ask me about failure of failure of a failure ...- figure it out for youself... )

What is interesting is the fact that we have , in the process, also broken the 2004 low, 1992 low and the falling neckline of a gigantic H&S pattern - for the 2nd time.
The only hope (?), is the support (weak) of the prallel line to the neckline.

[swingtrader]

Stickan, Thanks so much for the detailed explaination. Much appreciated! - ST