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Strategies & Market Trends : Moufassa's Lair

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To: Tradelite who wrote (10602)	11/20/2002 8:35:54 AM
From: moufassa7	Read Replies (1) of 13660

Not sure what you mean by not needing a third down day, maybe you could elaborate. In theory, H&S formations indicate distribution. After a run up, the market move sideways with an upward bias forming the left shoulder. This is an indication that the buying is beginning to be met with some selling. The charts then pop higher for a few days but fail to follow through and pull back into the trading range which forms the head and the beginning of the right shoulder. That appears where the SPX is now. The right shoulder should have a choppy sideways pattern with a downward bias for several days. This indicates that buying is gradually decreasing while selling is increasing. After the formation is complete, the distribution is finished and the market is ripe for a move lower.

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