Rick,
"Are the 3,1,2 stochastics always a precursor to 4,3,2 strength? Once 4,3,2 looks stronger, then what?"
Often, the 2 will exhibit similar movement with the 4, 3, 2 lagging by about a day. What the 3, 1, 2 did yesterday was to break out of a downtrend that had a quick double bottom. That setup in the 3, 1, 2 is usually not strong enough by itself to telegraph a bump up in price (but there are several that do). That is why I moved from the 3, 1, 2 to the 4, 3, 2 which, as of yesterday's close, is a little more than halfway into an inverted head and shoulders. A breakout of that formation would telegraph a move of at least 20%. As it works its way through the IH&S over the next 3 to 5 trading days, I'll keep tabs on it. There are no guarantees that it will complete the formation and break out of it but it's working on it and it's a nice one since a neckline may be established across the value of 80.
Doug R
Doug R |
