John, based on observing literally thousands of chart patterns over the last 15 years, I come to know and respect certain formations, but only in the proper context. A carpenter does not use a cross cut saw to do jigging work. It's a matter of the right tool for the right job. The traders biggest job is to determine the proper phase of the market he/she is studying and use the proper tools accordingly.
Moving averages are useful in determining major trend changes. I tend to use only the longer term ones because applied correctly they are very valuable tools for capturing the bulk of intermediate moves. As a trader, I prefer intermediate moves. What I expect to happen with HAL and SII is this; They will begin to roll over here, perhaps to eventually penetrate their 50 dma on the down side. They will rally back up to the 50 day which will then function as the "supply line". The 200 day will at the same time continue to ascend, playing "catch up". By the time the two come together again, the next intermediate up move will begin and these issues will again be candidates for purchase. Most of the divergences on the daily charts will be healed. The picture will be sideways consolidation with a downside bias. Perhaps 15% downside risk for a month long period. I contend there will not be much gold for short sellers, and to make money, they will need to be quick, two day trades, max.
But HAL and SII are not the only stars in the OS universe.
Wrt RIG, we are seeing YET AGAIN, a classical H&S bottom forming here, with explosive upside potential. We will know in a matter of days whether this is the case. Thanks for bringing the chart to the threads attention (I may be an owner tmw <g>). This will serve to illustrate an important point. Just as many were fooled by the OSX index on the way down (remember, many issues went on to make new lows while the index did not), they may be fooled on the way up. I believe what is occurring here is that money will be taken out of the leaders and put into the laggards. "Laddering" is the term used by Big Dog I believe. When these laggard issues are thoroughly exploited, then the leaders can resume their ascent. Catch the rotations.
Nice boy Bull. |
