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Strategies & Market Trends : Steve's Channelling Thread -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (17488)	6/10/2001 12:35:35 PM
From: ig	Read Replies (2) \| Respond to of 30051

For a week or so, I have been tracking the possibility of a Complex Head-and-Shoulders pattern setting up on the Naz, noting in particular the volume divergence. I would also like to point out the MACD histogram triple divergence ( dtraders.com ) which supports the expectation of an imminent reversal. Like you, Zeev, I am very stingy about giving back my gains from the recent bear rally, and I began to tighten my trading as soon as I saw the first divergence begin to form on the second "shoulder" -- which, at the time, was no more than a divergent high with the possibility of becoming a Simple Head-and-Shoulders pattern. My longer-term outlook (1-2 years) is still bullish, however. I am a big believer in the old Don't Fight the Fed philosophy. I am expecting significant Q3 upside earnings surprises to confirm a new Bull (which may likely have begun in April with accumulation by far-sighted investors). The question for me at this time is: What is the path from here to there? Will we see a final dip? If so, what will it be like? Will it be a higher low? A divergent lower low? A despairing plunging V? Will it be a predictable and measurable classic breakdown from this pending Complex Head-and-Shoulders pattern? The easy (and inane) thing to say would be "Time will tell," but I believe it is better to have some kind of focused "working expectation" in place at all times, even if it has to be corrected and updated minute-by-minute. Like an expert baseball batter who minimizes the difficulties of his task by "waiting for his pitch," by focusing primarily on the limited area of the strike-zone where he gets his best results, he is better able to react successfully to a favorable opportunity. For me, at this time, with the way the chart looks now, a break below the neckline would be a big fat slow-ball right into my favorite part of the strike-zone. If the market serves up that pitch to me, I will knock it out of the park. If instead some other patterns start to develop, I will continue to do my best to "stay ahead of the count" (another batting analogy) by focusing intently on the emerging possibilities and "lining up" on the ones that seem most promising. So, while I am decidedly bullish post-Q3, I won't be at all surprised to see a significant down-move between now and Q3 earnings announcements. For the time being, you are not alone in your near-term bearish outlook. :-) ig