NASDAQ SP DJ OEX INDICES TA ONLY! Message Board

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Strategies & Market Trends : NASDAQ SP DJ OEX INDICES TA ONLY!

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To: Topannuity who wrote ()	5/4/2000 2:00:00 PM
From: Topannuity	Read Replies (2) of 93

Keep a note plastered to your bulletin board reminding you that the DJ Industrials have been coiling and coiling for more than a year in what can be described as a "diamond" formation. siliconinvestor.com A diamond first begins as a "megaphone" with more and more volatile swings. Ie. first there's a break to a new low which turns out to be a trap and then a breakout to a new high which also is a trap. Followed by another new low and again another new high. You can imagine what this "yanking" does to the technicians' head. Then the price action begins to coil into a narrower and narrower apex. This displays the great indecision about the ultimate direction the market will take. Without follow through to the new highs and new lows created during the "megaphone" stage, market participants are confused about on which side to place their bets. We are now in the indecision stage, which on the chart, has transformed the "megaphone" into a developing "diamond". Note also the more "relaxed" developmnt of the diamond to the LEFT of the high range "center" and the more compressed and "volatile" (shorter durations to the up and down swings) to the RIGHT of center (i.e., the more recent activity.) So-called diamond formations can either resolve themselves as continuation patterns or terminal patterns. Of course, this kind of hedging about the ultimate resolution of a pattern is not very useful, but i thought I'd alert you to the formation of the pattern. One thing is for sure, when a market FINALLY BREAKS out of pattern which first had expanding highs and lows and then contracting highs and lows, the resulting move in the direction of the breakout is going to be MONSTROUS -- very HUGE. You can imagine the "energy" building inside this consolidation.

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