I think of all the posts made about the rising wedge, this one bests illustrates the points made by you and Michael (and me, without the delicacy you two display, of course):
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To:Michael Watkins who wrote (91)
From: Paul Shread Tuesday, Feb 13, 2001 11:44 AM
View Replies (2) | Respond to of 185
Not to belabor the point, but I just noticed, thanks to Chris's chart, that the QQQ didn't form a rising wedge at all, either in log (first chart) or linear (second chart). That lower trendline was a little too well formed to ignore, IMHO, with five touches on the 60-min. chart. Nothing personal; the one thing I know is chart patterns, probably the only thing I know well, and I think the wedge calls were sloppy (not just you, a lot of smart traders made the same call).
cache.wsrn.com
cache.wsrn.com
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Now, I don't want to be accused of personal attacks, because that is not and never was my purpose in challenging the folks who went out of their way to ignore the pattern, long after it had broken. But I think the following statement in the post is quite remarkable and is worth reflecting upon from for a couple of reasons:
Nothing personal; the one thing I know is chart patterns, probably the only thing I know well, and I think the wedge calls were sloppy (not just you, a lot of smart traders made the same call).
First, I rarely look at one of this poster's chart patterns that I agree with. The reason is that I don't view them as objectively drawn, for some technical reasons that differ from the way I've seen them most objectively drawn. But, more often the patterns defeat themselves when I read the poster's non-chart based "reads" and based upon what I have read of the poster's view of the market. That view, as I understand it, is committed to the position that we have seen the bottom in the markets, we'll not retest the 1/3 lows, intellectually there seems some connection between a support point and AG's comments in the presst, etc.
I really don't care whether the poster is correct on that score....the bottom, etc. I'm a trader. And from what I can tell from writings on SI, the poster is an "investor" who does not trade the type of technical breakdown and continuation pattern a trader should have seen in the formation under discussion.
I may be quite wrong in my observation, but I certainly hope the poster is not a trader who has committed to a bottom so adamantly.
Second, I don't think I've seen a single person anywhere, either here on SI, at stockcharts.com, securitytrader.com or anywhere else even hint that the rising wedge, whether imperfect or not, was not a potentially bearish pattern as it was forming....the break of which was a potential foreshadowing of a first measurement target of the 1/3 low.
Similarly, I may have missed someone other than a select few who swore, and some who still swear, that this is not a rising wedge breakdown in the NDX.
Moreover, I've not heard anyone else on SI who has so steadfastly refused to budge from their view since that beautiful pattern (whatever it was) broke down, nor have I heard them say how they are profiting from the NDX on the long side since that time. I've seen nothing more than premature calls of the bottom, yesterday was a higher low, etc.
But for maladies I've suffered myself and continue to suffer from time to time, I can't imagine that anyone could now dispute that the formation was a bearish one, whether or not it was perfectly formed. Fact is, the lower line of the formation broke, it broke hard and fast just like a rising wedge is wont to do. And, as we saw today, it seems hell bent on making it's first target whether we may want it to, or not.
I, for one, made good money anticipating that the pattern would be bearish on a breakdown. Isn't that the point? And, if so, what is the point of even discussing a non-trader's subsequent rationalizations for why the breakdown wasn't a breakdown and remains bullish despite the NDX having now dropped around 20% off the high?
I think the justifiable reason for discussing it is for those of us who actually trade to never, ever forget how powerful the ego is and how damning it can be for the Trader.
Just my thoughts......"Don't fight the wedge".....
Jeff |
