PUMA, hi Kevin. With reference to this stock, I put it my watchlist last week. This chart is an indication of why everyone's so skittish right now.
Charts just like this abound on the NASDAQ which is logical because so many techs have been hit the same way.
Anyway you can see the little triangle as the price gets forced into corner.
geocities.com
Once the stock pops..to the upside or downside, the movement can be violent. You'll notice the bollingers narrowing as well, has the same connotation.
The potential worry here, is that these symmetrical triangles will usually resolve themselves in the direction of the prior trend.
That is to say the trend that "entered" the pattern, in this case decidedly down.
That also means there could be a rally to the upper part of the triangle...in PUMA's case the 28's...and if it it doesn't break to the upside, will only have been a trade possibility, not a breakout
It's not written in stone by any means and this is far from a perfect example but it's close enough to look at and be cognizant of.
The NASDAQ itself is in a bit of a symmetrical triangle short term and appears to be resolving to the downside although the volume is a little low.
geocities.com
chartpatterns.com
What it means is what we already know, things bear close watching, no pun intended.
If we're very lucky they pop to the upside but that's unlikely without the cooperation of the Nasdaq. That's why the next few days are so important.
It's not for me to say to stay away, just to have limits in mind.
On the other side of the coin, if the techs continue to fall, health and oil (oil, not necessarily oil service) may fill the void, lots of good charts there. If techs rally then I assume they will lay low for awhile.
Stan |
