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Strategies & Market Trends : Point and Figure Charting
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To: John Post who wrote (4592)7/10/1998 1:13:00 PM
From: Bwe  Read Replies (1) of 34811
 
Hi John....It seems that Jan and I disagree on this one. Chartcraft pointed out FON's Bull Trap pattern on their telephone hotline and I agree with their assessment. Chartcraft will call a pattern a bull trap if a stock reverses course after a break of three or more tops and, of course, the stock must only rise one square after the break. I've read where the pattern wouldn't be called a bull trap until the stock gives a sell after the reversal which would be another interpretation. I find fault with that way of looking at it because the bull or bear trap is a predictive pattern, one that tells the investor that a move below a previous bottom or top is likely to occur. The bull or bear trap is like the High Pole Top and the bullish shakeout reversal patterns in that regard. The patterns all give subtle clues about what most likely will happen to a stock's price and chart BEFORE an actual buy or sell signal is given.

John, once a bull/bear trap pattern evidences itself, the odds are with you that the stock will most likely move below/above a previous bottom/top. Of course, it doesn't ALWAYS work out that way. This is not an exact science after all. A drop or rise also does not have to happen in the next column of O's or X's. If a stock does not decline after a bull trap, I believe it would add more strength to the bullish case for the stock.

Longwinded, but I hope helpful.

Take care,
Bruce
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