>>Technically nothing drops straight down, but the PTEN drop from $17.82 for the week of 5/21/01 to $7.02 for the week of 7/16/01 gets really close to a straight line.<<
You are right. That is exactly why I said it cannot continue forever. It has to stop somewhere. And the funds now have to defend their own interest since $28 or so is a very important technical support. I bet a lot of funds have NOT got rid off their position fast enough yet<g> so they need some running up to do so<g>
And now about the chart. Please take a look at CCI explaination here,
stockcharts.com
And then take a look at PTEN chart,
stockcharts.com[w,a]daclyyay[pb50!b200][vc60][iUd20!La12,26,9]&pref=G
CCI should be parallel with the stock direction. When it is in opposite direction, that would mean negative or position divergency.
Look at PTEN price went up until the third week of Jan. 2006, and look at CCI at the same time, it went down! that means negative divergency, indicating the stock would go down in the following days. And then look at the stock price in the next 3-4 weeks, it indeed went down, a lot.
Now look at CCI on Feb. 8 or 9, it went down all time low of a negative of >200, then it started to turn up, even though the stock price still kept declining. This opposite direction means positive divergency. This usually indicates the funds are accumulating while trying to keep the stock price low. So yesterday (maybe also next Tues.) will be the best time to pick up for long for a bounce. Actually, I think if were not due to that unexpected downgrade, PTEN might already start turing up yesterday.
This kind of divergency is not very common, but can be seen sometimes in some stocks, here are some example:
SNDK -- look at the stock price bet. mid-Dec. and early Jan., it kept going up, while CCI was coming down, followed by >20% decline
stockcharts.com[w,a]daclyyay[pb50!b200][vc60][iUd20!La12,26,9]&pref=G
GOOG -- look at the stock price from early Feb. to last Wed., it kept going down, while CCI was going up, followed by the big price surge on Thurs. and Fri.
stockcharts.com[w,a]daclyyay[pb50!b200][vc60][iUd20!La12,26,9]&pref=G
The benefit of watching CCI is that it can tell stock movement AHEAD of time, while other TA tells stock movement at that moment or during the prior time.
It is not often seen for divergency of CCI, but in case you see one, you should grap the opportunity. Just IMHO.
BTW, give credit where it is due. I learned about CCI from this guy's site. You can take a look at it too. He follows a lot of stocks, and have some good chart,
stockcharts.com[s67381134]&disp=O
here is another example -- NTAP bet. mid. Dec. to mid. Jan
stockcharts.com[s57481395]&disp=O |
