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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (80669)	7/21/2001 9:25:12 PM
From: KymarFye	Respond to of 99985

My comments about waiting for the breakout were more oriented towards those inclined to jump the gun on the falling wedge, expecting a quick rewarding excursion to the rally high, which would be the conventional measuring implication for a breakout. That could happen, but, as I suggested, and as BB just also suggested, a wedge such as this one could descend further (maybe a lot further) even in the normal course of development. In the ENCYCLOPEDIA OF CHART PATTERNS, Bulkowski provides an example of a falling wedge that breaks DOWN rather severely, and very near its apex, prior to breaking upward, and notes that roughly a quarter of the formations he observed in his research exhibited a similar tendency. In short, even if you "believe" in the formation, if you consider the possibility that the breakout may not occur prior to further elaborate downward-trending zig-zagging, committing now could by very disadvantageous for numerous reasons - time-wise as well as price-wise. I agree with you that until and unless that breakout occurs, the predominant trend in the techs is obviously down. I trade intraday almost exclusively, but, presuming decent entries and no peculiar stock-specific problems, if I had longer term short positions or puts, I wouldn't feel compelled to cover prior to the breakout.