Bob
Any good double bottom HAS to break below support to obtain the desired effect.It would appear that this setup is forming nicely.
That's a best odds play to be sure, for a 'double bottom', or as Trader Vic (Sperandeo) calls his particular setup, a 2B.
When a stock makes a marginal new high or low, testing a prior swing high in the time frame we are trading in, it clears out all the stops that players set and if the buying (in an uptrend) or selling that brought price there fails to continue, then the stock will drift back into congestion and many players may choose to exit. If an extended move has been underway, its exactly this sort of setup that I would want to trade on a counter trend basis, since this move is the defining moment of the begining of a new, opposite trend.
Although we don't know for sure that our counter trend trade is a new trend until the trading range at the end of this extended move is also left behind.
Here's a chart of EXTR which showing trend reversal on the daily chart. Turn upside down to see what a downtrend reversal looks like :)
intelligentspeculator.com
The indexes really lie here, as you say the many of the Generals are much weaker in many cases than the index suggests. I suppose we can see one scenario here were a big down day followed by a failure to continue to go down, might set the stage for some bottoming.
Although my gut (which I will not trade upon) feels that lower prices are still ahead. |
