Go to Jeff Salisbury LWGate Home Page.From: "Norman" <theboyd@tisd.net>
Subject: Re: [CANSLIM] Head & Shoulders on the indexes?
Date: Wed, 2 Jan 2002 06:47:35 -0600
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Regarding the H&S chart, If I tilt my head to the right (kinda like =
reading an LLUR, but the other way) I can see it. But just acting =
'normal' all I see is a series of lower highs and lower lows since the =
pinnacle in March 2000,
Norm
----- Original Message -----=20
From: Dave Squires=20
To: canslim@lists.xmission.com=20
Sent: Monday, December 24, 2001 6:43 PM
Subject: Re: [CANSLIM] Head & Shoulders on the indexes?
Tom,
I looked and I have to say I don't really see them either. As many =
know my approach is nearly all technical and the thing that strikes me =
is all these supposed head and shoulders tops look totally different and =
NONE of the patterns have symmetry. Experience tells me this is a little =
odd. One issue that I think is complicating the CS landscape at the this =
time the climax BUYING that occurred on 12/5. This is a very confusing =
issue for CS traders. Given the fact we are possibly entering an =
extended trading range ANY climax volume(buy or sell) would likely =
result in a termination of the current trend. This is what has occurred =
here. It's confusing to us because we consider good price moves on =
volume to be confirming indicators but this in not the case in extended =
trading ranges. To me the recent pullback is a direct result of the =
climax buying event on 12/5. Strictly a TA interpretation of course. =
Either way I can't make a good case for HnS tops in the indices =
currently.
Since we are on the M topic some may find an analysis I sent to some =
friends over the weekend of interest. Of course, its one man's option. =
Pasted below.
DSquires
NAZ Monthly
=
http://photos.yahoo.com/bc/swingtrader20000/vwp?.dir=3D/&.dnm=3DNAZ+Month=
ly.jpg&.src=3Dph&.view=3Dt&.hires=3Dt
This is a very interesting and useful chart. Looking purely at lows =
and highs this chart shows a clear downtrend. However, there are finally =
signs this vicious downtrend is weakening. First, the ADX is flat and =
rose weakly on the last leg down. This suggests trend strength is =
slowing. Second, the stochastic shows the market to be severely =
oversold. Notice that even during 1990 the indicator barely got below 20 =
and didn't stay there long. The indicator also diverged positively on =
the last leg down. Lastly, the trend channel has been broken, suggestion =
a sideways, basing stage may be starting. That's the good news. To me =
the 20 period MA is a reality check. If the market is below this line on =
ANY time frame it is not a good idea to trade against it. The blue line =
is the 20p MA and price is below it and it is sloping down. Also, notice =
the market has had a 3 bar correction against the main trend. Even =
though the market has rallied an incredible 50% the monthly clearly =
shows this is nothing more that a trend correction at this point. Look =
at the prior up trend...3 bar corrections happened many times. Finally =
look at this months bar. The month has not closed yet so this bar could =
change a lot especially with bullishly skewed holiday trading. That =
said, it is currently a bearish shooting star. So to sum up this time =
frame it is showing a 3 bar correction in a downtrend that is very =
oversold and weakening.
Weekly
=
http://photos.yahoo.com/bc/swingtrader20000/vwp?.dir=3D/&.dnm=3DNAZ+weekl=
y.jpg&.src=3Dph&.view=3Dt&.hires=3Dt
Although this chart shows a downtrend based on lower lows and highs =
the ADX is moving downward at a steep slope, which suggests a trading =
range. Also if you take out the 3 weeks after 9-11 the market is =
basically in a trading range. This time frame also has 3 pushes down, =
which tends to complete a trend. Oscillators work in a trading range and =
this market is overbought, near the upper, down sloping Bollinger band =
and at overhead resistance. Add to this the higher time frame trend and =
possible monthly reversal bar and the picture is not that rosy at this =
juncture. On the positive side price has recaptured the 20p MA which is =
sloping up slightly. Also the market has drawn 2 inside bars while =
holding the 40 week MA(same as 200 day). That pattern is a bullish =
continuation pattern but it's also at resistance. Looking ahead a bit =
the April low will be a key point if the market trades down from here. I =
say this because it is the first chance the market has to set up a sound =
basing pattern. If the market reverses off the April low support zone we =
will have a potential head and shoulders bottom. Weekly volume will be =
an important confirmation to the pattern. Summing up this chart is easy, =
it's overbought in a trading range with the higher time frame trend =
pushing down.
Daily
=
http://photos.yahoo.com/bc/swingtrader20000/vwp?.dir=3D/&.dnm=3DNAZ+weekl=
y---1.jpg&.src=3Dph&.view=3Dt&.hires=3Dt
The daily clearly shows an up trend but with recent weakness. It also =
shows a moving average minefield. This chart is a testament to the =
importance of the 200 day MA. It has created support and resistance 4 =
different times this month and last. The market is now trying to decide =
what it wants to do at this key resistance point. There are a couple of =
hints as to what might happen. This is the first attack on a DOWN =
SLOPING MA. The majority of the time the market is repelled by a down =
sloping MA. The chart also shows a break of a flattening 20p MA(blue). =
This is a good short-term trend indicator and the market needs to get =
back above it remain healthy. Finally, the 50 day MA(green) is just =
below and sloping up. It should support the market if it trades down to =
it. Another hint this trend is in a bit of trouble is the broken up =
trend channel. The important point here is after it broke it was tested =
3 days later and held. That's a pretty good indication of a trend =
change. Friday was hard to read with triple witching but Thursday was a =
heavy volume down day that closed on the low. Days like this tend to be =
followed by a lower low. So this chart shows a broken up trend near a =
key moving average with the higher time frame overbought. A test of the =
50 may be developing here.
130 minute chart
=
http://photos.yahoo.com/bc/swingtrader20000/vwp?.dir=3D/&.dnm=3DNAZ+130+m=
inute.jpg&.src=3Dph&.view=3Dt&.hires=3Dt
This chart shows a correction to the higher time frame up trend. Here =
the marker is oversold on support but the ADX is 19 and rising =
indicating a small presence of downtrend. This may be a two step =
correction against the trend. That would put the market at the bottom of =
the second high blue line, which is very close to the 50 day MA. This =
will be and important test level. If the 50 holds a test of the December =
high may occur. If it fails the April low may be tested. If the market =
recaptures the 20 day EMA on volume a new high is very likely. The =
market has retraced only 1/3 of the recent rally so the benefit of the =
doubt goes to the upside.=20
=20
----- Original Message -----=20
From: Tom Worley=20
To: CANSLIM=20
Sent: Monday, December 24, 2001 3:27 PM
Subject: [CANSLIM] Head & Shoulders on the indexes?
Several of the internet charting services I get have in the past =
week been discussing the H&S patterns they see on the major indexes. =
Since so much of chart reading is "in the eye of the beholder", I was =
surprised that no one in the group was mentioning this. So this =
morning, I took the time to look at all the major indexes at DGO, and I =
fail to see this pattern showing. Possibly the scales being used by =
these services is making the pattern appear, certainly it is clear on =
the charts they present. But I don't see it at DGO. When I use DGO beta, =
however, and kinda squint my eyes, I can see it on the NYSE Composite, =
Naz, and S&P 500, but it's still not that clear. I do not see it at all =
on the DOW 30, and the Russell 2000.
Since there is a wide variety of charting services being used by =
members, is anyone else seeing this pattern developing? What charting =
service are you using?
I confess to not being expert at reading / seeing / understanding a =
h&s pattern, so welcome any commentary.
Tom Worley
stkguru@netside.net
AIM: TexWorley
- ------=_NextPart_000_0035_01C19359.5C799990
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<DIV>Regarding the H&S chart, If I tilt my head to the right (kinda =
like=20
reading an LLUR, but the other way) I can see it. But just acting =
'normal'=20
all I see is a series of lower highs and lower lows since the pinnacle =
in March=20
2000,</DIV>
<DIV> </DIV>
<DIV>Norm</DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Ddcsquires1@home.com =
href=3D"mailto:dcsquires1@home.com">Dave=20
Squires</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Monday, December 24, 2001 =
6:43=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] Head =
&=20
Shoulders on the indexes?</DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial size=3D2>Tom,</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>I looked and I have to say I don't =
really see=20
them either. As many know my approach is nearly all technical and the =
thing=20
that strikes me is all these supposed head and shoulders tops look =
totally=20
different and NONE of the patterns have symmetry. Experience tells me =
this is=20
a little odd. </FONT><FONT face=3DArial size=3D2>One issue that I =
think is=20
complicating the CS landscape at the this time the climax BUYING that =
occurred=20
on 12/5. This is a very confusing issue for CS traders. Given the fact =
we are=20
possibly entering an extended trading range ANY climax volume(buy =
or=20
sell) would likely result in a termination of the current trend. This =
is what=20
has occurred here. It's confusing to us because we consider good price =
moves=20
on volume to be confirming indicators but this in not the case in =
extended=20
trading ranges. To me the recent pullback is a direct result of the =
climax=20
buying event on 12/5. Strictly a TA interpretation of course. Either =
way I=20
can't make a good case for HnS tops in the indices =
currently.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Since we are on the M topic some may =
find an=20
analysis I sent to some friends over the weekend of interest. Of =
course, its=20
one man's option. Pasted below.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>DSquires</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV>
<P>NAZ Monthly</P>
<P><A=20
=
href=3D"http://photos.yahoo.com/bc/swingtrader20000/vwp?.dir=3D/&.dnm=
=3DNAZ+Monthly.jpg&.src=3Dph&.view=3Dt&.hires=3Dt">http://pho=
tos.yahoo.com/bc/swingtrader20000/vwp?.dir=3D/&.dnm=3DNAZ+Monthly.jpg=
&.src=3Dph&.view=3Dt&.hires=3Dt</A></P>
<P>This is a very interesting and useful chart. Looking purely at lows =
and=20
highs this chart shows a clear downtrend. However, there are finally =
signs=20
this vicious downtrend is weakening. First, the ADX is flat and rose =
weakly on=20
the last leg down. This suggests trend strength is slowing. Second, =
the=20
stochastic shows the market to be severely oversold. Notice that even =
during=20
1990 the indicator barely got below 20 and didn't stay there long. The =
indicator also diverged positively on the last leg down. Lastly, the =
trend=20
channel has been broken, suggestion a sideways, basing stage may be =
starting.=20
That's the good news. To me the 20 period MA is a reality check. If =
the market=20
is below this line on ANY time frame it is not a good idea to trade =
against=20
it. The blue line is the 20p MA and price is below it and it is =
sloping down.=20
Also, notice the market has had a 3 bar correction against the main =
trend.=20
Even though the market has rallied an incredible 50% the monthly =
clearly shows=20
this is nothing more that a trend correction at this point. Look at =
the prior=20
up trend...3 bar corrections happened many times. Finally look at this =
months=20
bar. The month has not closed yet so this bar could change a lot =
especially=20
with bullishly skewed holiday trading. That said, it is currently a =
bearish=20
shooting star. So to sum up this time frame it is showing a 3 bar =
correction=20
in a downtrend that is very oversold and weakening.</P>
<P> </P>
<P>Weekly</P>
<P><A=20
=
href=3D"http://photos.yahoo.com/bc/swingtrader20000/vwp?.dir=3D/&.dnm=
=3DNAZ+weekly.jpg&.src=3Dph&.view=3Dt&.hires=3Dt">http://phot=
os.yahoo.com/bc/swingtrader20000/vwp?.dir=3D/&.dnm=3DNAZ+weekly.jpg&a=
mp;.src=3Dph&.view=3Dt&.hires=3Dt</A></P>
<P>Although this chart shows a downtrend based on lower lows and highs =
the ADX=20
is moving downward at a steep slope, which suggests a trading range. =
Also if=20
you take out the 3 weeks after 9-11 the market is basically in a =
trading=20
range. This time frame also has 3 pushes down, which tends to complete =
a=20
trend. Oscillators work in a trading range and this market is =
overbought, near=20
the upper, down sloping Bollinger band and at overhead resistance. Add =
to this=20
the higher time frame trend and possible monthly reversal bar and the =
picture=20
is not that rosy at this juncture. On the positive side price has =
recaptured=20
the 20p MA which is sloping up slightly. Also the market has drawn 2 =
inside=20
bars while holding the 40 week MA(same as 200 day). That pattern is a =
bullish=20
continuation pattern but it's also at resistance. Looking ahead a bit =
the=20
April low will be a key point if the market trades down from here. I =
say this=20
because it is the first chance the market has to set up a sound basing =
pattern. If the market reverses off the April low support zone we will =
have a=20
potential head and shoulders bottom. Weekly volume will be an =
important=20
confirmation to the pattern. Summing up this chart is easy, it's =
overbought in=20
a trading range with the higher time frame trend pushing down.</P>
<P>Daily</P>
<P><A=20
=
href=3D"http://photos.yahoo.com/bc/swingtrader20000/vwp?.dir=3D/&.dnm=
=3DNAZ+weekly---1.jpg&.src=3Dph&.view=3Dt&.hires=3Dt">http://=
photos.yahoo.com/bc/swingtrader20000/vwp?.dir=3D/&.dnm=3DNAZ+weekly--=
- -1.jpg&.src=3Dph&.view=3Dt&.hires=3Dt</A></P>
<P>The daily clearly shows an up trend but with recent weakness. It =
also shows=20
a moving average minefield. This chart is a testament to the =
importance of the=20
200 day MA. It has created support and resistance 4 different times =
this month=20
and last. The market is now trying to decide what it wants to do at =
this key=20
resistance point. There are a couple of hints as to what might happen. =
This is=20
the first attack on a DOWN SLOPING MA. The majority of the time the =
market is=20
repelled by a down sloping MA. The chart also shows a break of a =
flattening=20
20p MA(blue). This is a good short-term trend indicator and the market =
needs=20
to get back above it remain healthy. Finally, the 50 day MA(green) is =
just=20
below and sloping up. It should support the market if it trades down =
to it.=20
Another hint this trend is in a bit of trouble is the broken up trend =
channel.=20
The important point here is after it broke it was tested 3 days later =
and=20
held. That's a pretty good indication of a trend change. Friday was =
hard to=20
read with triple witching but Thursday was a heavy volume down day =
that closed=20
on the low. Days like this tend to be followed by a lower low. So this =
chart=20
shows a broken up trend near a key moving average with the higher time =
frame=20
overbought. A test of the 50 may be developing here.</P>
<P>130 minute chart</P>
<P><A=20
=
href=3D"http://photos.yahoo.com/bc/swingtrader20000/vwp?.dir=3D/&.dnm=
=3DNAZ+130+minute.jpg&.src=3Dph&.view=3Dt&.hires=3Dt">http://=
photos.yahoo.com/bc/swingtrader20000/vwp?.dir=3D/&.dnm=3DNAZ+130+minu=
te.jpg&.src=3Dph&.view=3Dt&.hires=3Dt</A></P>
<P>This chart shows a correction to the higher time frame up =
trend.=20
Here the marker is oversold on support but the ADX is 19 and rising =
indicating=20
a small presence of downtrend. This may be a two step correction =
against the=20
trend. That would put the market at the bottom of the second high blue =
line,=20
which is very close to the 50 day MA. This will be and important test =
level.=20
If the 50 holds a test of the December high may occur. If it fails the =
April=20
low may be tested. If the market recaptures the 20 day EMA on volume a =
new=20
high is very likely. The market has retraced only 1/3 of the recent =
rally so=20
the benefit of the doubt goes to the upside. </P></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2> </FONT></DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dstkguru@netside.net =
href=3D"mailto:stkguru@netside.net">Tom=20
Worley</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
href=3D"mailto:canslim@lists.xmission.com">CANSLIM</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Monday, December 24, =
2001 3:27=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> [CANSLIM] Head & =
Shoulders=20
on the indexes?</DIV>
<DIV><BR></DIV>
<DIV><FONT size=3D2>Several of the internet charting services I get =
have in=20
the past week been discussing the H&S patterns they see on the =
major=20
indexes. Since so much of chart reading is "in the eye of the =
beholder", I=20
was surprised that no one in the group was mentioning this. So =
this=20
morning, I took the time to look at all the major indexes at DGO, =
and I fail=20
to see this pattern showing. Possibly the scales being used by these =
services is making the pattern appear, certainly it is clear on the =
charts=20
they present. But I don't see it at DGO. When I use DGO beta, =
however, and=20
kinda squint my eyes, I can see it on the NYSE Composite, Naz, and =
S&P=20
500, but it's still not that clear. I do not see it at all on the =
DOW 30,=20
and the Russell 2000.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>Since there is a wide variety of charting =
services being=20
used by members, is anyone else seeing this pattern developing? What =
charting service are you using?</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>I confess to not being expert at reading / =
seeing /=20
understanding a h&s pattern, so welcome any =
commentary.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>Tom Worley<BR><A=20
href=3D"mailto:stkguru@netside.net">stkguru@netside.net</A><BR>AIM:=20
TexWorley<BR></FONT></DIV></BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>
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