Re: Head & Shoulders, or just Dandruff?
I believe the weekly chart is positioned in such a manner that market historians will point to & wonder why everyone didn't spot the forming head & shoulder reversal pattern that will be completed when the stock reverses...
Are you referring to the pattern that started in late 1996? It's pretty ragged, as H&S's go. What's your neckline? Is it 16? If so, that is a very non-traditional "head" (looks something more like Zaphod Beeblebrox or whatever that one-point-five-headed thing was in Hitchhiker's Guide to the Galaxy).
Is the neckline 14? That's a more intriguing price line, with lots of resistance, support, and congestion over the past 15 months. However, that would argue that the H&S is already completed, and that's a difficult conclusion to accept, given
a. the right shoulder did not roll up, but shot up from well below the neckline to well above it, hardly classic H&S; and
b. that we seem to be threatening a piercing of that neckline with the recent decline.
IMHO, there are two better technical theses, one of which you mentioned. That one is the decreasing volume on the recent down move. The other technical consideration is the trendline on the weekly chart from early April, to late July, to the current low (nice periodicity there, too). This indicates that the current low must hold for the uptrend from early April to stay in force. This trendline is the DMZ between tonyt's "12" case and the more popular "It's Going to 20" scenario.
If the trendline holds and the periodicity holds out, expect a two-to-three month move to the upside. If the trendline fails, 12 is the next significant stop (look at the multiple battles around 12 in the May-August timeframe).
BTW, did I mention that I think TA is a bunch of hooey? {Big Grin}
Pý
p.s. Please don't flame me if I'm off on some of the dates: I'm eyeballing a Quote.Com Java-generated chart for this back-of-the-envelope analysis. |
