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Strategies & Market Trends : Chart Formations -- Ignore unavailable to you. Want to Upgrade?

To: sean sanders who wrote (172)	7/13/1999 7:47:00 PM
From: Casaubon	Read Replies (1) \| Respond to of 967

iqc.com Be careful with TBI at this point. The weekly chart formation looks very much like an "upside gap two crow" formation, which is a bearish formation. But it could lead to a mat hold formation, with a weekly close higher than this weeks close, two weeks hence. This is because the two crow formation is a three period pattern and the mat hold is a four period pattern. I noticed that the weekly chart pattern is strikingly similar to VRTX, with TBI having an approximate 6 month lag time. I mention this because I don't think the right shoulder has started yet. I think the left shoulder is the double bottom at $9.00 then the head double bottomed at $6 and $5. Thus setting up the possibility of a symettric double bottom right shoulder starting anytime now. I paid $3.75 for the calls and got them "at bid" by calculating what the price "should" be at if the stock dropped back to $20 (thus the stock was at $20 when I bought my calls), and used a conservative volatility number that reflected the collapsing volatility of the narrow trading band between late april and mid may. I actually initiated my call purchase too soon. Had I waited until the bullish spring in late MAy, I could have paid less for the calls and been more certain of the reversal, and would not have had the value diminish over those weeks! In other words, I acted on the notion that the stock had stopped falling. It wasn't until the "spring" that I knew a reversal was at hand. I watched the same "spring" reversal happen with CPQ in mid june @ $20. Watch for "springs" in narrow trading bands; they are very powerful for predicting movements to the top of trading bands, at the very least! I didn't have money to act on this one. I bet we could make lots of cash just picking out consolidations which give a "spring" on modestly high volume (120-150% average volume). In general, buy calls when volatility is low and you recieve a trend reversal indication. Sell calls when volatility is high and you expect the stock to stall (ie major resistance levels, or very clear cut stalling candle patterns)