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To: donald sew who wrote (23602)	5/25/2000 7:08:00 PM
From: JD	Read Replies (1) \| Respond to of 42787

Just found this on search of net re: diamond formation traders.com Another lurker who appreciates your hard work......Jerry

To: donald sew who wrote (23602)	5/25/2000 7:09:00 PM
From: Paul Shread	Read Replies (2) \| Respond to of 42787

Donald, Ed Downs of SignalWatch.com has been doing a great job of chronicling the diamond pattern (http://www.signalwatch.com -- the bottom of the three charts on the right side of the page). I also read (can't remember where) that it's forming on the S&P too. I don't have my copy of Edwards & Magee with me, but they make a couple of points about the pattern (quite strongly, I should add): it is a rare pattern but easy to spot, occurring in the weekly chart almost always at major tops or at tops preceding significant intermediate reactions; and the minimum (their emphasis) move predicted by the pattern is the distance from the top point (11,700) to the bottom point (9,700) below the breakout point, which I interpret to mean 10,400 (the breakout point) minus 2,000 equals 8,400; Ed Downs thinks you should measure it from the bottom of the pattern, which would give us about 7,700. That's all I know. Edwards and Magee dedicate only a few pages to it, but they are quite firm in what the pattern means. Only in very rare cases is it a consolidation before a move up, and as we have broken through the lower boundary of the pattern, resolving it to the upside does not seem to be an option. Paul

To: donald sew who wrote (23602)	5/25/2000 7:21:00 PM
From: JD	Read Replies (1) \| Respond to of 42787

Diamonds: "Volume activity can help distinguish a diamond from an ordinary head-and-shoulders formation. The tendency might be to see a formation and interpret it as a diamond, when in reality it is only a head-and-shoulders pattern. This bias toward the diamond might be because an upsloping neckline would allow an earlier entry of the position and therefore more potential profit. A genuine diamond pattern is signified by a decrease in volume during the second half of the price pattern. This volume pattern is similar to the one found in a standalone symmetrical triangle. When a diamond forms at a top, the following downmove is usually significant. A minimum expectation of the move can be estimated by measuring the distance in points at the widest part of the diamond. Prices usually move from the breakout price to a low, giving a net change at least equal to this measurement, typically further."