Charles,
The best definition with accompanying charts for a 1-2-3 breakdown
is at <hardrightedge com/tw.htm>
WSP's chart was an obvious one for such a breakdown once the bulls
realized that 5.25 was a top, and the next couple of days pushed
the price up but only to a lower top each time. The bottom held
on the expectation of further buying enthusiasm but as the tops
became lower, a bull trap was being formed. That's when it is time
to exit. The "oh, god, nobody is going to buy this stock from me"
awareness appears and as sellers start to outnumber buyers, the drop
in price is sharp as bulls try to cut losses or lock in profits.
The reason for an expected sharp drop is because on the run up there
were two very strong days that propelled the stock up vertically.
A vertical price chart once anticipation has run out, will not hold.
I'm keeping a close eye on today's screen. Early buying pushed WSP
up 15 cents as bulls thought last nights close (4.30) was a bargain.
However, they have not been followed into the market by other buyers
and the stock is now only up 4 cents. If 4.30 is to form a base then
the volume over the next few days should fall off and the price
remain around this level. If volume increases with a drop in price
then we could see 3.60 being tested. If volume picks up and price
starts to move up, it will be time to jump in. This is a tricky
time. No news. The bears should now be out, the believers in.
The cautious, like myself,on the sidelines, waiting for a signal.
The risk to the cautious is that the move may be so fast that
we'll miss a good part of it. |
