Re: [CANSLIM] M - Is this a rotation or a correction?

From: Craig Griffin <cagriffin@mindspring.com>
Subject: Re: [CANSLIM] M - Is this a rotation or a correction?
Date: Tue, 20 Apr 1999 10:31:22 -0400

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Johan, 

>You wrote:
>>Looks like a correction in the NASDAQ and tech stocks to me.  The NASDAQ
>>move out of the recent base looks like "wedging" possibly.
>
>What do you mean exactly with the last sentence above?
>

Probably a mis-read of the chart.  But, what I was seeing, was on the NAS
(!COMP), from 4/5 to 4/13, a rising wedge coming out of the NAS base
formation.  It actually may be more of a rising flag, than a wedge.  Rising
flags are less reliably bearish than is a rising wedge in my experience.  

O'Neil said in one of the classes I attended that he looks for rising
wedges on stocks that have just broken out as a danger sign in combination
with price volume action.  He showed a chart and said that the stock was
"wedging" out of its base.

In the book "Technical Analysis of the Futures Markets", John Murphy says
"Whether the wedge appears in the middle or the end of a market move, the
market analyst should always be guided by the general maxim that a 'rising
wedge is bearish and a falling wedge is bullish'" (pg 162, Chapter 6,
"Continuation Patterns").  

Best Regards,
Craig

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